Why Some Independent Brokerages Are Considering Mergers
Most insurance brokerage owners who sell their business are motivated by one or more of three factors.
First, succession. They are approaching retirement and need a clear, executable transition.
Second, liquidity. They want to take some or all chips off the table, even if they continue working.
Third, operational strain. The business is performing well, but scale-related challenges are becoming increasingly difficult to manage independently.
When succession or liquidity is the primary objective, a sale is often the right answer. The structure, economics, and certainty of a sale align well with those goals.
The harder decision is for the third group.
We are speaking with more owners who still have significant runway left in their careers, often ten years or more, who want to retain control, continue building their firm, and remain independent. They are not looking to cash out. But they are feeling growing operational pressure and are not convinced they can solve it on their own.
For these owners, selling is rarely the desired outcome. More often, it becomes the option considered when other paths feel unclear.
What Is Driving Operational Pressure?
The businesses in this category are not broken. In many cases, they are profitable, growing, and well-regarded in their markets.
Common drivers include:
• Rising fixed costs: Technology platforms, cybersecurity, compliance, data governance, and IT support are increasingly critical. These costs scale poorly for smaller and mid-sized brokerages.
• Talent constraints: Recruiting and retaining producers, senior account managers, and operational leaders is becoming more competitive. Smaller brokerages struggle to offer the same depth of career paths and internal support.
• Execution fatigue: Owners find themselves spending more time managing systems, people, and risk, and less time on clients, growth, or leadership.
• Technology complexity: Many firms know what they need to implement but lack the internal capacity or scale to execute effectively. Systems are underutilized, fragmented, or overly dependent on a few key people.
• Insurance market access: Carrier consolidation, tighter underwriting appetites, and increasing minimum volume expectations are making it harder for smaller brokerages to maintain breadth and depth of markets. Scale increasingly influences access to preferred carriers, specialized programs, and negotiating leverage.
• Leadership depth: Even with no near-term retirement plans, owners recognize that building a deeper management bench takes time and scale.
Independence is still viable, but it is becoming harder to sustain without a stronger platform underneath it.
Many owners respond to these pressures incrementally. Hiring one more senior person. Changing a system. Adding another layer of process. Renegotiating a carrier relationship.
Each of these responses is rational on its own. The challenge is that most scale-related issues are structural rather than tactical. Over time, they tend to absorb more owner attention instead of relieving it. What initially feels like progress can quietly increase complexity and dependency on the owner.
Why Alliances Are Usually the First Step
Before considering a sale, most owners in this position explore alliances, networks, or informal clusters with other brokerages.
This step makes sense. Alliances are relatively easy to form, preserve legal independence, and feel low risk. They allow firms to share ideas, collaborate informally, and in some cases, pool limited resources.
They can help with:
• Sharing best practices
• Peer learning and informal support
• Selective buying power
They usually do not solve:
• Decision-making speed
• True cost leverage
• Leadership depth
• Accountability
• Unified technology execution
Because each firm remains fully independent, the hardest operational problems remain fragmented. Owners sense this, but when they look beyond alliances, the next option feels less defined.
The Gap Between Alliances and Selling
Between informal collaboration and an outright sale sits a true operational merger between like-minded independent brokerages.
For owners who are not motivated by liquidity or succession, this option is not about cashing out. It is about solving operational issues while preserving long-term independence and control.
Mergers are often discussed as a growth strategy. For many owners in this position, growth is not the primary driver. Restructuring operations for long-term viability while maintaining control is.
For many owners, the appeal of a merger is not scale for its own sake. It is the ability to stop fighting the same constraints alone. Shared leadership, shared infrastructure, and shared accountability can change how decisions get made and how sustainable the business feels day to day.
Growth can become a secondary benefit, but not the primary reason to merge. When a merged firm creates a stronger, more durable platform, it may also improve access to capital. This does not necessarily mean private equity or a loss of independence. In many cases, it simply means better access to traditional debt, or the ability to consider minority capital from aligned investors if and when it serves the owners’ objectives.
The distinction matters. For owners pursuing this path, retaining strategic control remains the priority.
Why True Mergers Are Difficult to Execute
A real merger forces issues into the open that alliances conveniently avoid.
There is no liquidity event to smooth over misalignment, so the fundamentals matter more.
Key challenges include:
Strategic alignment
Values, growth philosophy, and long-term vision must genuinely align. Similar size alone is not enough.
Operating model differences
Producer compensation, service models, technology stacks, and decision-making authority must be reconciled.
Governance and control
Who decides what, and how? Without clarity, friction is inevitable.
Relative valuation and economics
Even in so-called mergers of equals, businesses are rarely equal. Normalized EBITDA, growth profiles, and risk exposure must be assessed objectively.
Leadership roles
Overlapping ownership and executive roles need to be addressed deliberately. Ambiguity here erodes trust quickly.
Future optionality
Owners need clarity on what happens if one partner underperforms, wants to exit, or if a future sale opportunity arises.
These issues are solvable, but only with intention and structure. Without that, many owners conclude they like the idea but cannot see how to make it work.
A Different Way to Think About the Decision
This path is not for everyone. Owners who value complete autonomy above all else often find that alliances are as far as they are prepared to go. A true merger requires comfort with shared governance, disciplined decision-making, and confronting difficult issues earlier than most owners are used to.
For those unwilling to engage at that level, remaining independent, even with its challenges, may still be the right choice.
For others, the decision is often framed incorrectly.
The choice is not simply independence versus selling. It is whether to continue absorbing operational strain alone, rely on loose alliances that only partially help, or deliberately build a stronger platform through a true partnership.
