Brokerage executives share M&A strategies

The beginning of 2023 saw a slowdown in mergers and acquisitions (M&A) activity in Canada’s P&C brokerage space as brokers’ interest in deal-making appeared to decline.

At the time, the inflationary environment and higher cost of capital to make deals were mentioned as contributing factors. But by mid-2023, M&A activity picked up again, and it’s not projected to slow anytime soon.

Canadian Underwriter asked several Canadian P&C brokerage execs if their M&A strategies changed over the last year in light of the changing economic environment and what they look for in a deal.

All indicated their strategies remained relatively consistent.

“SIB remains committed to becoming a Top 20 in North America insurance operation and to continue to grow our business across Canada and into the U.S.,” SIB Corp. (StoneRidge Insurance Brokers) CEO and president Ted Puccini tells Canadian Underwriter.

“The M&A process has remained the same for SIB — identifying brokerages with a long and successful operating history who want to partner with SIB to maximize the value of their business and return,” Puccini says. “We look for long-term partners that share in SIB’s values and are committed to growing alongside SIB for the long term.

“As [we’ve] become a national insurance brokerage, our size has allowed us to target larger M&A deals that are transformational to our business.”

For Yan Charbonneau, chief vision officer and chairman of the board at Synex Business Performance, they’re still a commercial P&C-focused acquirer. But Charbonneau says, “we are opening to high-worth personal lines.”

Jamie Lyons, president and CEO of Westland Insurance, says his brokerage’s approach over the past year has been “consistent in terms of how we view M&A strategically, but more selective and with a greater emphasis on mutual fit.

“We continue to look for brokers that bring personalized service, local/specialized expertise, a strong sense of community and connection to their clients and employees,” he says. “We continue to work hard once they are a part of Westland to enhance what makes them special, while providing the resources they need to thrive as their business needs and the market shifts.”

Lyons says while a large part of Westland’s strategy is to “continue pursuing traditional P&C brokerages, we’ve achieved significant growth over the past few years in commercial lines, including niche and specialty business, employee group benefits, and MGA business.

“We’re also investing in technology and our employee experience, including the rollout of a new broker management system,” he adds. “These, along with the strength of our partnership with BroadStreet [Partners] and [Ontario Teachers’ Pension Plan], help us attract quality brokerages and serve more Canadians coast-to-coast.”

Both SIB and Westland are private-equity backed, and Charbonneau doesn’t see an end to PE interest in the Canadian P&C brokerage space in the near future. “Private equity is still very active and the consolidators are largely backed that way, giving almost unlimited resources for good acquisitions.”

 

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