(wire)
Mergers and acquisitions fall drastically in `09
Merger and acquisition activity among insurance brokerages plummeted by 40 percent in 2009 compared to the previous year as a result of the economy and other factors, according to investment banker Hales & Company.
Overall, the number of announced transactions fell from 307 in 2008 to 185 last year, one of the least active years in the past decade.
According to Hales, the five major factors in this trend are uncertainty about the economy, the threat of national health care, instability in the credit markets, an increased focus by banks on strengthening their balance sheets and increasing stock prices, and a lack of capital and increased cost of debt.
"This decrease in valuation multiplies resulted in a significant valuation gap between buyers and sellers and caused many sellers to take a wait-and-see approach to selling their agency," Hales said.
Overall, the number of announced transactions fell from 307 in 2008 to 185 last year, one of the least active years in the past decade.
According to Hales, the five major factors in this trend are uncertainty about the economy, the threat of national health care, instability in the credit markets, an increased focus by banks on strengthening their balance sheets and increasing stock prices, and a lack of capital and increased cost of debt.
"This decrease in valuation multiplies resulted in a significant valuation gap between buyers and sellers and caused many sellers to take a wait-and-see approach to selling their agency," Hales said.
