UK insurance distribution M&A activity rose sharply in April 2025, marking the busiest month of the year to date, according to analysis by MarshBerry.
Sixteen transactions involving UK-based targets were announced during the month, well above the long-term monthly average of 9.7. The activity coincided with the start of a new tax year, although deal volumes remain below levels seen in 2023 and 2024.
The April spike brought year-to-date (YTD) deal activity to 35 transactions. This represents a 26% decline compared to the 47 deals recorded during the same period in 2024. Buyers included a mix of established acquirers, privately owned firms, and two insurance carriers.
According to MarshBerry, the presence of carriers in M&A – Markel and Zurich each announced MGA acquisitions – may signal a broader trend in a softening market.
Changes to business asset disposal relief came into effect on April 6, 2025, increasing the rate from 10% to 14%. While the adjustment could have influenced the timing of some transactions, MarshBerry noted that the tax savings for sellers would have been capped at £40,000, making it unlikely that this alone caused a significant pre-deadline rush. For many, accelerating a deal may have simply resulted in bringing tax liabilities forward by 12 months.
Private equity (PE) involvement in UK insurance distribution deals has also 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 annualised proportion since before 2016.
MarshBerry attributed this to increasingly challenging conditions for generating returns, such as greater economic uncertainty and softer insurance rates. However, the firm stated that PE is still expected to play a long-term role in the sector’s consolidation.
The active month of April follows a notably subdued start to 2025. Previous MarshBerry data shows that only three M&A deals were announced in January, the lowest monthly figure since 2017. This compares to an average of 11 January transactions since 2016 and reflects a significant departure from historical trends, where 9.4% of annual deal volume typically occurs in the first month.
The slow start contrasts with record-breaking annual totals in both 2023 and 2024, which saw 151 and 152 transactions completed, respectively. November 2024 marked the highest monthly total for that year, with 18 deals announced.
By the end of November, 135 deals had been reported YTD, just below the 137 recorded at the same point in 2023. MarshBerry has indicated that while the January downturn may prove to be a short-term deviation, it adds to indications that 2025 could see lower overall M&A activity.
Among April’s activity, there were signs of market diversification. Alongside carrier acquisitions, the period included a rare management buyout (MBO), with Yutree Insurance opting for internal succession rather than a sale to a consolidator.
MarshBerry suggested that, in a market where mid-sized targets are becoming scarce, smaller and less conventional deals may become more prominent.
Data from the first four months of 2025 highlight a continuing decline in average deal size. Of the 35 deals announced this year, 24 – or 69% – involved targets valued below £5 million. This figure compares to 59% across all transactions since 2016, despite broader valuation inflation in that period. Only two of this year’s deals involved businesses with more than 100 employees, and both were minority PE investments.
MarshBerry reported that the average headcount for acquired firms in 2025 YTD is 30, down from 41 in 2024 and 51 in 2023. If refinancing transactions are excluded, the 2025 figure drops further to 17.
As growth through organic means becomes harder to realise, particularly in the current pricing environment, M&A remains a key growth channel. But MarshBerry pointed to the growing challenge faced by domestic consolidators – especially those backed by PE – if the acquisition pipeline is increasingly populated by only smaller targets.
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