UK insurance distribution M&A activity experienced a significant surge in April 2025, marking the busiest month of the year to date. According to analysis by MarshBerry, 16 transactions involving UK-based targets were announced during the month, substantially above the long-term monthly average of 9.7 deals.
The increased activity coincided with the start of a new tax year, although overall deal volumes remain below the levels observed in 2023 and 2024. The April spike brought the year-to-date (YTD) deal activity to 35 transactions, representing a 26% decline compared to the 47 deals recorded during the same period in 2024.
Market Dynamics and Player Involvement
Buyers in these transactions included a mix of established acquirers, privately owned firms, and insurance carriers. Notably, two insurance carriers – Markel and Zurich – announced MGA acquisitions, which, according to MarshBerry, may signal a broader trend in the softening market.
Private equity (PE) involvement in UK insurance distribution deals has declined as a proportion of overall volume. PE and PE-backed deals represented just 40% of M&A activity so far in 2025, the lowest annualized proportion since before 2016. MarshBerry attributed this decline to increasingly challenging conditions for generating returns, such as greater economic uncertainty and softer insurance rates.
Changes in Deal Characteristics
The first four months of 2025 have seen a continuing decline in average deal size. Of the 35 deals announced this year, 24 (or 69%) involved targets valued below £5 million. This compares to 59% across all transactions since 2016, despite broader valuation inflation during that period.
Only two of this year’s deals involved businesses with more than 100 employees, and both were minority PE investments. The average headcount for acquired firms in 2025 YTD is 30, down from 41 in 2024 and 51 in 2023. When refinancing transactions are excluded, the 2025 figure drops further to 17.
Market Implications
As growth through organic means becomes increasingly challenging, particularly in the current pricing environment, M&A remains a key growth channel. However, MarshBerry pointed to the growing challenge faced by domestic consolidators – especially those backed by PE – as the acquisition pipeline becomes increasingly populated by smaller targets.
The April activity included diverse deal types, such as a rare management buyout (MBO) by Yutree Insurance, which opted for internal succession rather than a sale to a consolidator. This diversification suggests that, in a market where mid-sized targets are becoming scarce, smaller and less conventional deals may become more prominent.
