Gallagher could do $7.5bn in M&A to end-2025 just on tuck-ins

Global re/insurance brokerage group Arthur J Gallagher could spend its full $7.5 billion capacity on M&A to end-2025 just on the back of an increased volume of smaller tuck-in deals, officials have suggested. 

Gallagher has plotted cash and ratings-neutral debt capacity for M&A at $3.5 billion in 2024 and $4 billion in 2025, CFO Doug Howell told the company's Q1 earnings call. 

“I think the volume of our tuck-in deals will increase,” Howell told investors. “Will we spend 3.5 billion this year and 4 billion next year? Maybe. We'll see. I think we've got a good shot at it.” 

The higher interest rate environment may be preventing smaller players from re-investing in their business to the degree required to stay competitive, pushing those players towards the tool box available to producers within the Gallagher group, Howell argued. 

“We have an opportunity to increase the volume of the nice tuck-in deals that we see out there,” he said. 

Larger deals are possible, albeit perhaps less likely, if opportunities do manage to hit the table, CEO Patrick Gallagher nonetheless insists. 

“When opportunity presents itself, we are not afraid,” the CEO said, citing the purchase of Willis Re as a more recent example. “We are not afraid of chunkier deals.” 

The group has about 50 terms sheets signed or being prepared at the moment representing about $350 million in annualised revenues, CEO Gallagher said in his opening comments to the call, albeit without his traditional add-on comment that Gallagher “will get our fair share” of those deals. 

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