M&A activity snapshot
Lower-middle-market financial services M&A is dominated by fee-based distribution and advice businesses. MarshBerry counted 854 announced U.S. insurance brokerage transactions in 2025, up 0.8% from 847 in 2024 and the third-most-active year on record. Wealth management is running even hotter: ECHELON Partners counted 262 RIA transactions in the first half of 2026, the most active first half on record, against 220 a year earlier.
These trackers count small private deals that broad surveys miss. EY, which tracks only publicly disclosed deals, recorded 947 U.S. and Canadian financial services deals in 2025, down 5% from 998, while disclosed value rose from $166.9 billion to $188.7 billion. The two series measure different universes and should not be added together or compared.
The supply of targets is deep. Census County Business Patterns counted 469,382 U.S. finance and insurance establishments in 2023, and by Axia's calculation from the Census size classes, 91.8% had fewer than 20 employees. Consolidation is visible in insurance: independent agencies total an estimated 37,000 in the 2026 Big "I" Agency Universe Study, a small decrease from 2024. Advisers are similarly small: 92.8% of the 16,544 SEC-registered advisers employed 100 or fewer people in 2025.
Who is buying
Private capital does most of the buying. Private capital-backed buyers accounted for 605 of the 854 U.S. brokerage transactions (70.8%) in 2025, and the 10 most active buyers completed 362 deals (42.4%). The two most active were BroadStreet Partners with 65 deals and Inszone Insurance Services with 44, with ALKEME third at 42.
Wealth management follows the same pattern. PE-backed acquirers completed 91 of 120 RIA transactions in Q2 2026, or 75.8%, an all-time high, and 24 repeat buyers accounted for 62.5% of quarterly volume. For a small fee-based firm, the realistic buyer is usually a sponsor-backed platform doing serial tuck-ins, not a one-time strategic acquirer.
Lenders draw a different buyer set: banks, other lenders, and private credit investors that underwrite the loan book. The largest platforms raise capital without a full exit. HUB International took a minority investment of about $1.6 billion at a $29 billion enterprise value in 2025, up from $4.4 billion when Hellman & Friedman first invested in 2013.
What buyers look for
Buyers of agencies, MGAs, RIAs, and TPAs are buying recurring revenue. The Big "I"'s IA Magazine summarizes the thesis as recurring revenue from annual policy renewals, strong profit margins, and notable resilience during economic downturns, plus a fragmented market with clear consolidation opportunities. Retention, organic growth, and how much of the book depends on the owner decide where a firm lands in the range.
Buyers of lenders are buying a balance sheet. Mercer Capital notes that for a lender you often can estimate net income solely by reviewing several years of balance sheets, and that the most commonly used book value metric is tangible book value. Credit performance, funding costs, and capital adequacy drive value more than headcount or client count.
Licensing and consent travel with every deal. An adviser needs client consent to assign advisory contracts, an agency's producer licenses and carrier appointments need to carry over, and an MGA's underwriting authority depends on its carrier contracts. Each subindustry page below covers the specific rules.
What makes a strong company
A fee-based financial services firm that draws competitive interest typically shows:
- Recurring revenue (renewal commissions, advisory fees, or per-employee administration fees) that does not depend on the owner's personal relationships.
- Organic growth separate from acquisitions or premium-rate increases, documented by year.
- Producers, advisers, or account managers below retirement age, with a written succession plan.
- Clean regulatory records: licenses, registrations, carrier appointments, and audit findings with no open issues.
- No single carrier, client, or referral source representing an outsized share of revenue.
Lenders are judged on different benchmarks: loss and delinquency history through a cycle, funding facilities with room to grow, and earnings that support book value.
Valuation and deal structure
Two valuation languages apply. Fee businesses trade on EBITDA, and a large share of the price can be contingent: specialty firms represented by MarshBerry averaged 13.89x EBITDA upfront in 2025, and 19.42x including earnouts. That sample is a selected group of high-quality firms, not a market average. No major lower-middle-market data provider publishes a financial-services-only multiple, so subindustry pages cite vertical-specific data where it exists.
Lenders trade on book value. U.S. bank acquirers paid a median 150% of tangible common equity as of Sept. 2, 2025, compared with 131% in 2024 and 124% in 2023. Non-bank lenders tend to trade lower because of credit risk: in 2022, the median publicly traded specialty lender traded at 0.93x book and 8.2x earnings. Current non-bank lender deal pricing is not publicly tracked, so treat the 2022 figures as a method, not a comp.
Earnouts, seller rollover equity, and retention agreements for key producers or advisers are common in fee-business deals. The mix varies by subindustry; the subindustry pages cite what the data shows for each.
Subindustries
Financial services splits into five subindustries with different buyers, value drivers, and regulators. Three are distribution or advice businesses, one administers benefits and claims for others, and one lends from its own balance sheet.