With its latest acquisition of four firms on Feb. 1,
The recent additions include Aisling Partners Insurance Brokerage, in Worcester, Mass.; Davidson Benefits Planning, in Tigard, Ore.; HR Benefit Advisors, in Rochester, N.Y.; and Spring Consulting Group, in Boston. Alera Group did not disclose details of the acquisitions.
This recent wave of acquisitions makes Alera Group the 14th largest independent insurance agency and the 7th largest independent employee benefits firm in the country, according to company claims.
Aisling Partners Insurance Brokerage is a boutique benefits consulting firm that was established in 2003. HR Benefit Advisors was founded in 1993 and provides consulting, population health management, benefits administration, communication and compliance services. Spring Consulting Group bills itself as a “multidisciplinary” employee benefits and risk management consulting firm. It offers organizational risk services for small group health insurance to captive insurance for large multi-national corporations.
Davidson Benefits Planning is Alera Group’s most recent acquisition. Founded in 1983, it offers strategic planning, cost management solutions, employee communication and compliance management.
“The industry expertise and cultural values of each of these firms enhances our ability to grow Alera Group through a culture of collaboration,” says Alan Levitz, CEO of Alera Group.
The fuel for Alera’s mergers
Benefit firms are continuing to rely on mergers and acquisitions as a way to enhance their offerings and expand into new regions of the country and Alera is no different, says Chief Development Officer Rob Lieblein.
At first glance, he says, observers might assume that the Affordable Care Act is the reason for increased mergers and acquisitions.
“While this broad-sweeping federal mandate certainly pushed many firms to merge or sell, the primary culprit is the general change in what is expected from advisers,” says Lieblein. “With limited resources, increased expectations, and more complex, expensive technology and compliance requirements, many are looking for ways to partner.”
Other factors for steady M&A benefit adviser activity include a wealth of firms looking to buy smaller firms. There are just more sellers in marketplace, says Lieblein.
“This is because size and scale matter in this industry. Resources, sweeping technology changes, and an increase in needed capabilities become more challenging for smaller, independent firms, who simply can’t compete against those who are larger,” he says. Independent firms look at larger firms with scale and infrastructure and see the opportunity for growth, given the multitude of additional resources and capabilities that exist, he adds.
Lieblein adds that “due to the influence of private equity in the industry and the aggressive nature of brokers, activity will continue to be strong throughout 2018.”
Another factor pushing M&A activity is the fact that brokerage valuations have been rising in the last few years. “These valuations are extremely high and they’re helping drive activity from sellers. According to
Lieblein predicts that benefit adviser M&A activity will continue even if the economy slows down. He notes that there is nothing on the horizon from political standpoint that will significantly disrupt the benefits space.
“At some point, we will hit another slowdown in the economy — which is normal — and at that point we will see prices drop. But right now, the economy is strong and the timing is right for a merger or acquisition — versus waiting three or four years,” he says.
