Andrew Holt says that acquisition is the way into the Top 50

This latest Top 50 provides many insights into the changing world of the broker, but one thing stands out: acquisition is the way to grow if you want to climb up the broker Top 50 listings.

Last year continued on the trend of much manic M&A activity with many wise brokers pursuing growth through acquisition. But that said, values have weakened to reflect the softening state of the market.

The Towergate Partnership has proved the success of the merger trail by jumping nine places to reach number 10 in the Top 50. And for those just outside the 50, acquisition is the way to gain entry.

The top two growth companies are both acquirers and both are based in the North of England: Oval and Smart and Cook have both consolidated their positions with sizeable acquisitions in 2004. On the back of this trend it is not surprising to see venture capitalists continue to make their presence felt.

The Top 10 companies by profit margin contains a wider range of businesses: quoted, London and international sector, personal lines and of course acquisitive companies.

It should be noted that a number of smaller Lloyd's brokers are continuing to post impressive results, which means that of the Top 50, more than half are Lloyd's brokers.

This year's brokerage entry level into the 50 of £12,337m is lower than last year's of £13,130m - a sign of consolidation above this point. Those companies still aspiring to be in the Top 50 have therefore the potential of a lower entry point but will still require a solid effort in the softening market.

This means if such companies are not well down the acquisition road then they are going to stay outside the Top 50. Next year's bunch of new listings look likely to come from the London market.

And it should be remembered that no broker has had a tougher year than Marsh given all the ramifications from the Spitzer investigation in the US, yet it has made it to the top spot. There is a lesson in there somewhere.