Briefing: Why M&A can no longer be the default growth strategy

For much of the last decade, M&A has been the primary driver of growth for many in the UK broking market. Consolidators, private equity and international players – especially from the US – have built scale at speed, betting that size alone would deliver value.

But, with the number of M&A deals falling to their lowest levels since the start of 2021 – according to Insurance DataLab’s exclusive analysis of H1 2025 M&A activity in UK general insurance – that strategy looks like it is starting to run out of steam.

The mid-market, which has long been a happy hunting ground for acquisitive firms, is looking short of attractive targets that are willing to sell, while valuations remain high and cheap debt is not as readily available as it once was.

Buyers are, of course, still making moves in the market – but they are often more cautious, more strategic and much more selective about what they pursue.

This shift leaves acquisitive broking firms facing a hard truth – growth can no longer be built solely on acquisitions.

Future winners achieving sustainable growth will be those that combine targeted acquisitions with a genuine commitment to building strength from within.

This means investing in core areas of a business to deliver long-term value. These include:

• Data and technology to unlock new efficiencies and uncover deeper insights.
• People and talent. The insurance industry continues to be a people business and getting the right blend of technology and people will be key to successful growth.
• Client service. In a post-Consumer Duty world, being able to demonstrate fair value and good customer outcomes will increasingly be a market differentiator and the true definition of competitive advantage.

For sellers, the new reality is equally clear – buyers are no longer just chasing volume, they are hunting value that can deliver over the long term.

This raises the bar for any business looking to sell. A compelling growth story backed by solid financials is a given ask from buyers, but so too is cultural fit, niche expertise and a relentless focus on the customer.

Sustainability over scale

In many ways, this shift in how to attain growth is a healthy correction for the market.

The M&A frenzy of the past few years often prioritised scale over sustainability. A more selective market forces both buyers and sellers to sharpen their propositions – and that should create a stronger foundation for the industry over the longer term.

One of the clearest signs of this correction is the regional shift in acquisition activity.

Where London and the south east once dominated deal flow, the balance is now moving more towards the regions, with acquisitions outside of this traditional heartland increasingly accounting for a larger proportion of deals.

These acquisitions are also much more likely to showcase a sector niche or industry specialism, something that offers a genuine unique selling point and distinctive expertise, even if it does not deliver the same headline gross written premium (GWP).

The lesson here is that M&A should not be seen as a tool just to deliver growth through a sudden injection of GWP, but to drive sustainable value through strategic integration and a shared vision of the future.

That is why the firms most likely to succeed are those with clarity of purpose – those that know why they want to buy, what gaps they are filling and how new businesses will be integrated effectively to deliver long-term and meaningful value to customers and the overall business.