San Francisco, CA – Woodruff Sawyer, one of the largest independent insurance brokerages in the US, announced today the release of the 2024 Private Equity and M&A Looking Ahead Guide. With over 25 years of experience, Woodruff Sawyer is a trusted advisor to the private equity, venture capital, and M&A community, and provides counsel on 150+ transactions per year, ranging from middle market growth equity deals to strategic acquisitions, traditional private equity buyouts, and SPAC/de-SPAC transactions.
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As we predicted in last year’s Looking Ahead Guide, 2023 has been a tough year for dealmakers. Since peaking in Q4 2021, quarterly volumes are now down 24% by deal count and 49.5% by deal value. Exit activity has fallen 75% from 2021’s peak to trough on a quarterly basis, showing no signs of improving over the next several quarters.
However, even in this challenging market, private equity funds are still managing to put capital to work by keeping deal sizes small or finding alternative sources of capital to finance transactions. Looking forward to Q4 2023 and into 2024, Woodruff Sawyer anticipates while the deal landscape may continue to evolve and new structures develop, deal flow will increase compared to Q1 2023.
How has this new deal environment impacted the insurance side of the equation? Simply put, insurance due diligence will continue to gain steam as deal teams seek ways to improve and maximize EBITDA efficiencies and mitigate risk to their investment assets. At the same time, the M&A insurance market is adjusting to reduced deal flow and smaller deal sizes with fierce competition from carriers. The result? Much lower reps and warranties premiums, especially for deals underwriters have been more cautious about in the past.
Luke Parsons, Partner & Senior Vice President of the Private Equity Practice at Woodruff Sawyer notes, “Transactional risk and insurance due diligence advisory work is intrinsic to our DNA, and we have infused that into our 2024 Looking Ahead Guide. We are grappling with the lowest deal flow in 10 years and to get the job done, investors are moving quickly. Insurance due diligence often takes a back seat to operational, legal, financial, or accounting diligence. But, if poorly executed, acquirers and investors alike may leave themselves exposed to increased risks that could negatively impact EBITDA in the short term and diminish the long-term value of the asset. Having an expert team of insurance advisors will help deal teams act with more speed and certainty regarding the key protector and mitigator of EBITDA risk for companies: insurance.”
For deeper insights, advice, and our predictions for the mergers and acquisitions and private equity landscape in 2024, read the full Guide.
About Woodruff Sawyer
As one of the largest independent insurance brokerage and consulting firms in the US, Woodruff Sawyer protects the people and assets of more than 4,000 companies. We provide expert counsel and fierce advocacy to protect clients against their most critical risks in property & casualty, management liability, cyber liability, employee benefits, and personal wealth management. An active partner of Assurex Global and International Benefits Network, we provide expertise and customized solutions where clients need it, with headquarters in San Francisco, offices throughout the US, and global reach on six continents. For more information, call 844.972.6326, or visit woodruffsawyer.com.
