Gallagher: Acquiring AssuredPartners for $13.5 Billion

Arthur J. Gallagher announced that it will acquire insurance broker AssuredPartners in a deal valued at $13.5 billion. Strategically, we think the fit makes sense. AssuredPartners appears to be essentially a smaller version of Gallagher, with a focus on serving middle-market clients. Like Gallagher, AssuredPartners has pursued a roll-up strategy, completing 500 acquisitions since its formation in 2011 and more than 200 since 2020. We think Gallagher’s proven ability to create value through small acquisitions is one of its key strengths, and AssuredPartners brings additional expertise in this area. While we see execution risk with any deal of this size, we think the combination won’t dilute Gallagher’s narrow moat and could even strengthen it. We like that management said the deal won’t slow its tuck-in M&A activity. We think smaller acquisitions are more reliable in terms of value creation, relative to the large deals like this one that Gallagher occasionally pursues.