US and UK private equity targets Emerald Isle for M&A opportunities

In recent years, Irish brokers have been in the midst of an apparent whirlwind of M&A activity.

For example, there were 30 Irish broker buyouts announced in 2024 alone – and experts believe the true volume of these transactions is likely to be even higher still.

So, what makes Ireland so appealing for broker acquisitions and does the M&A whirlwind show any signs of slowing down?

Insurance broking in Ireland

The insurance broker market in the Emerald Isle is largely made up of respected, independent firms – in many ways similar to the British broker landscape before waves of consolidation began in the 1990s.

In 2020, there were just nine insurance broker acquisitions in Ireland, according to FTI Consulting. That figure rose to 17 in 2021 and 30 in 2022, then dipped to 20 in 2023 before rising again to 30 in 2024.

However, these numbers are likely to be just the visible tip of the broking M&A iceberg in Ireland.

This is because many acquisitions go unpublished and relatively unnoticed, according to MarshBerry managing director Armand Hoftijzer.

However, the recent interest in snapping up Irish brokers comes overwhelmingly from UK-based consolidators that are backed by private equity.

In 2024, 21 of the 30 Irish broker acquisitions were from private equity portfolios, with nine being bought by a traditional broker, according FTI Consulting’s aforementioned data.

The management advisory’s associate partner and head of Europe, Middle East and Africa (Emea) insurance M&A, André Frazão, told Insurance Times: “Despite increased levels of M&A activity in the Irish broking market, most sizeable businesses have been acquired by UK and US-based private equity-backed broker consolidators, which saw the Irish market as a natural first step in their international expansion.”

One of the higher profile Irish broker buyouts came from intermediary organisation The Clear Group, which bought its first broker in Ireland, MBC Insurance, in November 2024.

The same month saw Markerstudy take over Hughes Insurance, based in Northern Ireland, with consolidators such as Howden, The Ardonagh Group and Brown and Brown all making purchases too.

The Clear Group’s managing director of M&A, Oscar Holloway, said: “The insurance market in Ireland is blessed with some brilliant businesses.

“It is a well regulated and sophisticated insurance buying market, with attractive underlying gross domestic product (GDP) growth forecast relative to the UK and much of Europe.”

Why are Irish brokers so attractive for M&A?

There are several factors driving UK interest in snapping up Irish broking firms.

The first is simply that the brokers are there to be bought – this compares to a UK landscape where many consolidators have resorted to looking further afield for new purchases as the broking mid-market contracts due to heavy ongoing consolidation. For example, PIB Group has invested in buying brokers in Poland and Spain, to name a few operational focuses.

The Irish broking market consists of a high proportion of individual brokers, geographically close to the UK and without any language barrier.

Buying up other brokers in a largely non-consolidated market also gives improved clout with underwriters.

Irish brokers – and brokers in general – also tend to be attractive targets for M&A due to their loyal customers providing a predictable revenue stream.

EY Ireland corporate finance partner Ronan Murray said: “A key driver of the industry’s M&A activity is the intrinsic benefit of scale. Underwriters offer higher commission to the larger brokers to ensure they have access to their customer base.

“With that, there are immediate arbitrage opportunities for a broker when acquiring a smaller competitor [that] may be providing a similar level of service, but at a lower commission rate.

“This strategy is further supported by the ‘recurring revenue’ nature of the industry and the sticky customer base – where consumers and businesses renew or change their policies annually, typically through their existing broker.”

The ability to cross-sell insurance is another major factor in larger brokers looking to buy smaller Irish brokers with an existing niche, Murray added.

In addition, brokers are relatively cheap to expand once bought. The nature of insurance broking involves fairly few assets, which means scaling up does not require much in the way of investment.

Another driver of M&A in this jurisdiction is the evolving state of Ireland itself when it comes to insurance.

Holloway added: “In recent years, the Irish insurance market has emerged as a global placement and servicing hub in its own right, bringing a greater strategic rationale to this M&A activity.

“The influx of private capital to insurance distribution, first in the USA and then UK markets, has triggered similar waves in most European countries – by both local and global investors.

“The difference in Ireland is how domestic brokers have recognised the value to their clients of cross-border combinations, whereas in most other countries, acquirers have remained largely domestic to date.”

What is the future for Irish broker M&A?

Frazão said that “there remains a tail of over 2,000 small independent broker businesses” in Ireland, “suggesting that M&A activity will continue at pace in the foreseeable future”.

EY Ireland corporate finance partner Fergal McAleavey added: “The consolidation in the insurance brokerage and financial services industry is showing no sign of slowing down.

“This competition to acquire the best assets in the sector has led to seller friendly valuation multiples, which is encouraging owners to consider their exit options – perhaps earlier than originally intended. We are seeing this at EY through our pipeline and conversations with clients.”

It is clear that the strong interest in Irish broker M&A is not going away – and may even be gathering pace.