During his keynote address, Rusbuldt discussed numerous industry trends including the hot topic of mergers and acquisitions (M&A). 

”Agency M&A activity will eventually slow down,” said Rusbuldt. “It is unrealistic to expect the M&A frenzy will continue for the long term at this pace for a host of reasons.”  

The average number of mergers and acquisitions of some scale over approximately the last 10 years was 276 per year. In 2014 the number was 310 and in 2015 it was 401.  

Rusbuldt noted that the reasons for current M&A activity include:

• Low Interest rates: cost of capital is inexpensive and fueling acquisitions by private equity, aggregators and consolidators.  

• Volatile stock market: slowing national and global growth are contributing to a search for returns from industries with reoccurring cash flows.

• Technology advances: by leveraging technology, larger agencies can achieve operational and digital marketing efficiencies.

• Aging agency owners: retiring baby boomers are creating a ready pipeline for acquisitions, especially for agency owners who don’t have a diversified pool of assets to generate retirement income, or do not have an internal perpetuation plan.

“There are numerous reasons why M&A will eventually slow down but some of the major ones include a shrinking pool of available larger agencies offering scale that have not already been involved in M&A activity; inexpensive capital will eventually end; ROI will increase in other sectors and vehicles; and the math of high multiples for agencies in many cases outpaced the possibilities for efficiencies and/or organic growth,” continued Rusbuldt. “While no one can predict an exact date when agency M&A will slow down, it is inevitable.”

Rusbuldt addressed the Independent Insurance Agents of North Carolina InsurEXPO on Friday, Feb. 26.

                                                                                    

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