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Insurance Broker Valuations:
The Elephant in the Room
by Managing Partner, Mike Fletcher
Overview
While insurance broker valuations remained resilient in 2025, essentially staying near all‑time highs, the elephant in the room—Brown & Brown (NYSE: BRO)—has received little attention.
From a valuation perspective, what happened with Brown & Brown? After the brokerage’s value surged more than 15% in the first quarter of 2025, it subsequently plummeted by nearly one-third from its June peak to the end of the year.
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Brown & Brown began 2025 trading at an EBITDA multiple of 17.8x but finished at just 12.9x.
In contrast, the average multiple for agencies with between $1 million and $10 million of EBITDA (the midmarket) began at 11.9x and ended at 11.4x during 2025.
To be fair, it’s not just Brown & Brown. Collectively, public brokers’ values have fallen 21.0% since March and are down 2.7% from 2025, compared to the S&P’s 16.6% gain.
2025 Midmarket Broker Performance
We highlight Brown & Brown because it’s the bellwether for investor sentiment in the midmarket brokerage sector. Its drop in EBITDA multiples signals a broader concern for the insurance distribution M&A landscape.
Interestingly, the overall midmarket broker M&A market has shown remarkable resilience. Because broker deals are typically highly leveraged, it was not surprising that valuations peaked in 2022 when interest rates were lowest. What is surprising is that valuations have stayed near those highs even after the largest interest-rate increases in U.S. history.
That said, signs of strain are emerging. In 2024, the market expected large brokerage deals ($250 million+ in EBITDA) to trade in the 17–19x range. But AssuredPartners ($1 billion EBITDA) priced at about 14.5x and Risk Strategies ($600 million EBITDA) at approximately 16.0x in their acquisitions by Gallagher and Brown & Brown. The drop in multiples for large transactions wasn’t wholly unexpected—rising interest rates have made it harder to justify lofty valuations (see prior analyses on Brown & Brown’s Risk Strategies deal and the Arthur J. Gallagher / AssuredPartners transaction).
With public equity (PE)-backed brokers typically carrying 4–5x EBITDA in leverage (higher when including preferred equity), we anticipated leverage constraints would cap multiples for large, PE-backed deals at 16x. Brown & Brown’s valuation decline is unique in that it was not driven by higher interest rates. Its leverage, roughly 2.4x at the start of 2025, is among the lowest of the large brokers.
With minimal leverage on its balance sheet, why did Brown & Brown decline so steeply? The downturn was tied to a sharp slowdown in organic revenue growth that became apparent with the Q2 2025 results, where organic growth fell to 3.6% compared to 10.0% in Q2 2024. The stock began weakening and the Q2 2025 release confirmed the slowdown, starting the sustained decline.
Where Do Midmarket Insurance Broker Valuations Go From Here?
We expected midmarket valuations to soften in 2023, but that segment remained resilient even as the broader market pulled back. Three factors have sustained higher‑than‑expected deal pricing: (1) insurance revenues growing roughly 10% annually over the past three years, offsetting rising interest costs; (2) multiple arbitrage; and (3) a proliferation of buyers driven by strong PE interest.
At the same time, insurers’ confidence in pricing sufficiency, supported by healthy industry surplus levels, has encouraged a more assertive underwriting posture. The market has reached the familiar transition point where carriers will trade premium on renewals to win new accounts. By Q4 2025, the average premium change for commercial P&C business had moderated to 0.2%, a significant retreat from the peak increase of 11.7% in Q3 2020.
When agencies are acquired at 10–13x and later sold at around 16x, multiple arbitrage supports valuations despite today’s negative interest rate. With Brown & Brown’s public mark now at 12.9x, the feasibility of that arbitrage is in question.
For each agency on the market, roughly 50 PE‑backed or public brokers are positioned to bid; this demand remains the strongest support for current valuations.
While the data points to lower valuations ahead, we were proven wrong the last time we predicted a broker apocalypse. Despite the headwinds, there are positives:
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Premium growth is down, but it’s likely weaker at public brokers, which have greater exposure to larger accounts and excess and surplus lines—segments with larger rate declines.
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As growth slows disproportionately at larger firms, they will lean more on acquisitions to meet targets, which should support valuations.
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Interest rates have already fallen by about 50 basis points, and with a benign inflation report and the prospect of further cuts, financing conditions are easing.
Conclusion
Public brokers took another hit last week amid AI disruption headlines—Brown & Brown slid about 8%. Still, we believe institutional demand and strategic acquisition needs will support midmarket valuations for at least the remainder of 2026.
Goldman Sachs Equity Research
Average EBITDA measures the guaranteed purchase price at closing and excludes earnouts and stock appreciation, with the range of multiples spanning from 9.5x to 14.5x TTM EBITDA
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