Merger and acquisition activity seems to be plentiful among technology vendors lately, with the recent news of HP acquiring 3Com and Xerox to acquire ACS, but program administrators and managing general agents (PAs/MGAs) also have seen their fair share of action. According to
The survey finds that 72% of PA and MGA respondents indicated an interest in growing through acquisition, which rose slightly from 70% in 2008. Fifty-nine percent of respondents expressed an interest in acquiring other PAs/MGAs, while 44% would prefer to acquire carriers. Both figures increased 5% from 2008.
One MGA in acquisition mode is
Guy Carpenter’s survey went on to find that PAs/MGAs are not as interested in acquiring wholesalers or third-party administrators (TPAs). In fact, responses indicate that only 13% of respondents are targeting wholesalers for acquisition this year, compared to 23% in 2008. Additionally, just 5% of respondents are considering acquiring TPAs. However, that number is up from 0% in 2008.
Another report echoes Guy Carpenter’s findings.
Bobby Reagan, the firm’s CEO, said earlier this year that while there is slight drop-off in M&A activity, he believes “the slowdown in deals is simply not as a bad as some headlines would have us believe.”
“Buyers and sellers are more deliberate and cautious today than they were one or two years ago,” he said. “And the conservation of capital and various uncertainties are causing some restraint in M&A activity.
Reagan added that while economic and political uncertainties may further dampen the pace of the activity, deals will continue.
“While we’ve seen a retreat in the factors that propelled the three-year increase in activity and values, other fundamental drivers are solidly in place,” he said.