The Broker Who Ate the World
In the final weeks of 2023, Arthur J. Gallagher & Co. closed its 600th acquisition since the turn of the millennium — a figure so staggering in its relentlessness that it deserves to sit, for a moment, in silence. Six hundred purchases. Roughly one every twelve business days for twenty-three years. Not venture bets. Not moonshots. Not the glamorous M&A of tech giants swallowing unicorns. These were insurance brokerages: regional shops in Tulsa and Taunton, specialty MGAs in London, employee benefits consultancies in Auckland, small-town risk managers whose founders were ready to retire. Each acquisition was modest in isolation. Together, they constitute one of the most disciplined compounding machines in the history of American financial services — a $65 billion enterprise built not on a single breakthrough product or a visionary pivot, but on the unglamorous, iterative, devastatingly effective logic of rolling up a fragmented industry while everyone else was looking at something shinier.
The insurance brokerage sector is easy to ignore. It lacks the existential drama of underwriting, where a single hurricane can erase a decade of profits. It lacks the algorithmic mystique of quantitative trading or the network-effect glamour of payments platforms. A broker sits between the buyer of insurance and the seller of insurance, advising, placing, and servicing risk. The broker takes a commission or a fee. That's it. There is no inventory risk, no balance sheet leverage, no catastrophe exposure. The business model is, at its core, a professional services firm with recurring revenue, high retention, and operating leverage — which is precisely why it has attracted some of the most sophisticated capital allocators of the last half-century, and why Gallagher's particular execution of the playbook deserves anatomizing.
By the Numbers
Arthur J. Gallagher & Co.
$11.2BTotal revenue (FY2024)
$65B+Market capitalization (mid-2025)
~56,000Employees worldwide
600+Acquisitions since 2000
~90%Client retention rate
39.3%Adjusted EBITDAC margin (Brokerage, 2024)
4thLargest insurance broker globally
21%+Organic revenue growth + acquisitions (2024)
What makes Gallagher unusual — what separates it from the dozens of private-equity-backed roll-ups that have attempted the same strategy and ended up as overleveraged messes — is that the acquisitions are not the strategy. They are an accelerant for a culture. And the culture is the strategy.
A Family Business Disguised as a Public Company
Arthur James Gallagher was a salesman. Not a financier, not an actuary, not a systems thinker — a salesman, in the purest mid-century Chicago sense. Born in 1927 on the South Side, the son of Irish immigrants, he sold insurance for a series of small agencies before founding his own in 1927. Actually, let me correct that. The founding date is itself a small act of myth-making: the firm dates its origin to 1927, when Arthur J. Gallagher began his career as an insurance agent, but the modern company — the one that went public, the one that acquired six hundred brokerages — is really the creation of his sons, particularly Robert Gallagher and J. Patrick Gallagher Jr., who transformed a family insurance agency into a publicly traded corporation.
J. Patrick Gallagher Jr. — Pat, as everyone in the industry calls him — became CEO in 1990 at the age of 44 and held the role for over three decades, stepping aside as CEO in 2022 but remaining chairman. A competitive golfer, a devout Catholic, and a man whose public persona radiates an almost unnerving cheerfulness, Pat Gallagher is the kind of CEO who would personally call the founder of a twenty-person brokerage in Nebraska to explain why they should sell to Gallagher instead of a private equity firm. The pitch was always the same: we'll keep your name on the door, we'll keep your people, we'll give you our back office and our markets, and we'll let you sell. The pitch worked six hundred times.
We are a sales and service culture. That's what we are. We're not an acquisition machine. We're a place where good producers come to do their best work, and acquisitions are how we find more of those people.
The Gallagher family's ownership stake has been diluted over decades of public trading, but the family's imprint on the firm's culture remains indelible. This is a company headquartered not in Manhattan or Bermuda but in Rolling Meadows, Illinois — a suburb of a suburb of Chicago, accessible by a stretch of Interstate 90 that is nobody's idea of a power corridor. The campus is modest. The executive compensation, by the standards of large-cap financial services firms, is restrained. The emphasis on what the company calls "The Gallagher Way" — a codified set of cultural principles emphasizing teamwork, ethical conduct, and entrepreneurialism within a shared infrastructure — is so earnest it borders on corny, which is exactly why it works. Cynicism is easy to replicate. Earnestness at scale is almost impossible.
The Anatomy of a Roll-Up That Doesn't Roll Over
To understand Gallagher's acquisition engine, you first need to understand why insurance brokerage is structurally suited to consolidation — and why most consolidators fail anyway.
The insurance brokerage market is enormous and deeply fragmented. In the United States alone, there are roughly 40,000 insurance agencies and brokerages. The vast majority are small, privately held, and founder-dependent. The economics are attractive: a well-run brokerage generates 20-30% EBITDA margins on a revenue base that renews at 85-95% annually. But small brokerages face structural headwinds — they lack access to the largest insurance carriers' best terms, they struggle to invest in technology and compliance infrastructure, and their founders face succession crises as they age. The baby boomer generation built tens of thousands of these firms. Now they need exits.
This dynamic has attracted an extraordinary amount of capital. Private equity firms have spent tens of billions assembling brokerage platforms — Hub International, Acrisure, Assured Partners, NFP, and dozens of others have all pursued aggressive acquisition strategies funded by leverage. The basic playbook is familiar: buy at 8-10x EBITDA, bolt acquisitions onto a shared platform, extract synergies, and re-leverage to buy more. It works until it doesn't, usually when organic growth stalls, integration costs mount, and debt service consumes the very cash flow that justified the acquisitions.
Gallagher's approach differs in three critical ways.
First, leverage discipline. As a public company, Gallagher has maintained investment-grade credit and a conservative balance sheet. Its debt-to-EBITDA ratio has typically hovered between 2x and 3x, a fraction of what private-equity-backed competitors carry. This means Gallagher can acquire through cycles — buying during hard markets when sellers are anxious, buying during soft markets when multiples compress — without the existential pressure of debt covenants.
Second, cultural absorption rather than financial extraction. When Gallagher acquires a firm, it doesn't gut the staff, impose a new brand, and strip costs. It integrates the firm's producers into its existing branch structure, gives them access to Gallagher's carrier relationships and specialty practices, and — critically — allows them to retain significant autonomy in how they serve clients. The integration model is designed to be attractive to the next acquisition target. Every happy Gallagher producer is a recruiting tool.
Third, tuck-in scale. Gallagher does not seek transformative mergers. The median acquisition is small — often $5 million to $50 million in revenue. This means any single deal failure is immaterial. The law of large numbers applies: acquire fifty small firms a year, and even if a handful underperform expectations, the portfolio delivers. This is not glamorous. It is relentless.
Gallagher's M&A cadence, 2019–2024
| Year | Acquisitions Closed | Annualized Revenue Acquired | Notable Deals |
|---|
| 2019 | ~45 | ~$600M | Regional P&C and benefits firms |
| 2020 | ~35 | ~$450M | Pandemic-era opportunistic buys |
| 2021 | ~50 | ~$1.3B | Willis Re treaty reinsurance operations |
| 2022 | ~40 | ~$700M | Buck Global (employee benefits) |
|
Then, in December 2024, Gallagher did something it had never done before. It announced the acquisition of AssuredPartners for approximately $13.45 billion — a deal that would add roughly $7.5 billion in revenue and vault Gallagher from the fourth-largest global broker toward the third. The deal was transformative in a way that Gallagher had historically avoided. Whether it represents a strategic leap or a deviation from the discipline that built the franchise is the central question facing the company today.
The Invisible Infrastructure
Walk into a Gallagher branch office in, say, Birmingham, Alabama, and you will see something that looks indistinguishable from any mid-market insurance agency — account managers on phones, certificate requests being processed, renewal applications being assembled. The magic, such as it is, operates at the level of infrastructure that the client never sees.
Gallagher's internal platform provides its brokers with access to a carrier panel that a standalone agency could never assemble. The company maintains relationships with hundreds of insurance carriers globally, and its scale gives it negotiating leverage on terms, commissions, and access to specialty markets. A producer at a small Gallagher branch in Des Moines can place a complex environmental liability policy through Gallagher's specialty division in New York, accessing London market capacity via Gallagher's UK operations, with the client experiencing a seamless local relationship. This is the economic logic of consolidation: the distribution is local, the manufacturing access is global.
The technology layer has been a work in progress. Gallagher invested heavily in what it calls its "centers of excellence" — shared service centers that handle routine processing, analytics, and compliance functions, freeing producers to sell. The company has also invested in data analytics capabilities, leveraging its enormous book of business to provide clients with benchmarking data on their risk profiles, claims experience, and coverage structures. These are not headline-grabbing AI initiatives. They are the patient accumulation of operational advantages that compound over years.
Our organic growth speaks for itself. When you're growing organically at 7, 8, 9 percent in a business with 90-plus percent retention, that tells you the value proposition is working. The acquisitions amplify what's already there.
Organic growth — the revenue generated by existing operations before acquisitions — is the true measure of a brokerage's health. A roll-up that acquires but cannot grow organically is a Ponzi scheme with a corporate treasury. Gallagher's organic growth has been consistently strong: mid-to-high single digits in most years, accelerating to 7-9% in the hard market conditions of 2021-2024. This organic growth is driven by three factors: rate increases in the underlying insurance market (when premiums rise, commissions rise proportionally), new business wins, and expansion of services within existing client relationships. Gallagher's ability to grow organically while simultaneously absorbing dozens of acquisitions per year is the clearest evidence that its integration model works.
The Risk Management Segment Nobody Talks About
Gallagher operates two reporting segments, and the one that gets almost no attention from analysts is, in some ways, the more strategically interesting.
The Brokerage segment — which generates roughly 75% of revenue — is the bread and butter: retail property/casualty insurance, employee benefits consulting, reinsurance brokerage, and specialty lines. This is the engine the acquisitions feed.
The Risk Management segment — Gallagher Bassett, operating somewhat independently — is a different animal entirely. Gallagher Bassett is one of the world's largest third-party claims administrators, processing and managing insurance claims on behalf of insurance companies, self-insured corporations, and public entities. It generates roughly $1.4 billion in annual revenue and operates in over 30 countries.
Claims administration is, if anything, even more boring than insurance brokerage. But the economics are compelling: contracts are multi-year, switching costs are enormous (migrating a claims book is operationally excruciating), and the business generates significant data that feeds analytics capabilities. Gallagher Bassett's data on claims frequency, severity, and resolution patterns is a strategic asset that informs the brokerage segment's underwriting insights and client advisory capabilities.
The segment also provides a natural hedge. When the insurance market hardens and claims costs rise, Gallagher Bassett's per-claim fees and volume increase. When the market softens and claims decline, the brokerage segment benefits from competitive dynamics that favor sophisticated brokers who can find coverage in difficult markets. The two segments don't perfectly offset, but they create a diversification that pure-play brokerages lack.
The Geography of Ambition
For most of its history, Gallagher was a domestic company — a Midwestern broker with a handful of international offices. The transformation into a genuinely global operation is a recent phenomenon, and it maps precisely onto the acceleration of the acquisition strategy.
The pivotal moment came in 2013-2014, when Gallagher embarked on a concentrated campaign to build a presence in Australia, New Zealand, and the United Kingdom. The logic was straightforward: these were English-speaking common-law jurisdictions with mature insurance markets, fragmented brokerage landscapes, and cultural compatibility with Gallagher's integration model. The company acquired dozens of firms across these markets in a span of two to three years, establishing itself as one of the largest brokers in each.
Gallagher's geographic expansion milestones
1927Founded as a one-man insurance agency in Chicago.
1984Initial public offering on the New York Stock Exchange.
1990J. Patrick Gallagher Jr. becomes CEO.
2000sAcquisition pace accelerates; 100+ deals by mid-decade.
2013-14Major push into UK, Australia, and New Zealand via serial acquisitions.
2021Acquires Willis Towers Watson's treaty reinsurance operations for ~$3.25 billion.
2022Pat Gallagher transitions to Executive Chairman; J. Patrick Gallagher III named COO.
2024
The UK expansion proved particularly fruitful. The Lloyd's of London market provides Gallagher's global specialty capabilities, and the UK's position as a hub for international reinsurance and specialty lines gave Gallagher access to risk-transfer mechanisms that would have taken decades to build organically. Today, international operations account for roughly 35% of brokerage revenue — up from low single digits a decade ago.
The pattern is consistent: enter a market through a beachhead acquisition, then fill in the map with tuck-ins. Never enter a market without a local operator who understands the regulatory landscape and client culture. The playbook translates because the underlying economics of insurance brokerage are universal: recurring commissions, relationship-driven sales, and the perpetual need for risk transfer.
The Willis Reinsurance Deal and the Pivot to Specialty
In 2021, Gallagher executed what was, at the time, its most ambitious acquisition: the purchase of Willis Towers Watson's treaty reinsurance brokerage operations for approximately $3.25 billion. The deal was a byproduct of the failed Aon-Willis Towers Watson merger — regulators required divestitures, and Gallagher was the opportunistic beneficiary.
The Willis Re acquisition was transformative for several reasons. It instantly made Gallagher a top-five global reinsurance broker — a market previously dominated by Aon, Marsh/Guy Carpenter, and a handful of others. Reinsurance brokerage is a high-margin, relationship-intensive business where scale matters enormously: the largest brokers have access to the largest pools of reinsurance capital, which gives them the ability to structure the most complex and competitive programs. For a mid-market commercial broker like Gallagher, adding reinsurance capabilities created a new dimension of service — the ability to advise not just on primary insurance placements but on the entire risk-transfer chain.
The deal also brought approximately 2,500 employees, including some of the most experienced reinsurance brokers in the industry. Integrating this many people — many of whom had been through the trauma of the failed Aon-Willis merger — required exactly the kind of cultural absorption that Gallagher had practiced at smaller scale for decades.
Pat Gallagher described the integration in characteristically simple terms: We told them, "Welcome to the family. Now go sell." The reinsurance operations have performed above initial expectations, generating strong organic growth in a hardening reinsurance market and providing cross-selling opportunities with Gallagher's retail brokerage clients.
AssuredPartners: The Bet That Breaks the Pattern
The December 2024 announcement of the AssuredPartners acquisition was a seismic event — not because of what it said about the insurance brokerage market, but because of what it said about Gallagher.
AssuredPartners was the seventh-largest U.S. insurance brokerage, with approximately $7.5 billion in revenue and 20,000 employees across more than 400 offices. It was a private-equity-backed roll-up in the classic mold — assembled through hundreds of acquisitions under the ownership of GTCR and Apax Partners, carrying significant leverage, and generating strong top-line growth through a combination of organic and acquired revenue.
The $13.45 billion price tag was by far the largest acquisition in Gallagher's history — roughly equal to all the capital Gallagher had deployed on acquisitions in the previous decade combined. The deal was structured with a mix of cash and stock, requiring Gallagher to take on approximately $9.4 billion in new debt, temporarily pushing its leverage ratio above its historical comfort zone.
This is a once-in-a-generation opportunity to combine two companies with remarkably similar cultures and complementary capabilities.
The bull case is compelling. AssuredPartners fills geographic and specialty gaps in Gallagher's domestic footprint, adds significant scale in employee benefits and middle-market commercial lines, and brings a large book of business with cross-selling potential. The combined entity would generate approximately $18-19 billion in annual revenue, narrowing the gap with Marsh & McLennan and Aon. The cultural argument — that AssuredPartners, despite its PE lineage, shares Gallagher's entrepreneurial, producer-centric ethos — is plausible, given that many AssuredPartners agencies were originally acquired from the same pool of founder-led firms that Gallagher targets.
The bear case is equally straightforward. This is not a tuck-in. This is the largest integration Gallagher has ever attempted, involving a company nearly as large as Gallagher's entire domestic brokerage operation. The leverage required is real. The potential for cultural collision between Gallagher's earned, multi-decade identity and AssuredPartners' more recent, financially engineered culture is non-trivial. And the deal was announced at a moment when private-equity brokerage valuations were at cyclical highs — meaning Gallagher paid peak multiples for assets that PE firms were eager to exit.
The market's initial reaction was measured: Gallagher's stock declined modestly on the announcement, reflecting concern about dilution and integration risk, before recovering as analysts digested the strategic logic. As of mid-2025, the deal was progressing through regulatory review, with expected closing in the first half of 2025.
Whether this deal represents the culmination of the Gallagher playbook — the moment when decades of disciplined tuck-in experience finally equipped the company to execute a transformative acquisition — or the moment when the discipline broke, is the question that will define the next five years of the company's trajectory.
The Next Gallagher
Succession is the quiet risk that every family-influenced corporation carries. Pat Gallagher dominated the firm for over thirty years, and his personal relationships with acquisition targets, carrier executives, and industry peers are an asset that doesn't appear on any balance sheet.
The transition has been carefully staged. J. Patrick Gallagher III — Pat's son — was named Chief Operating Officer in 2022 and has been progressively assuming operational control. Tom Gallagher, another family member, runs significant portions of the domestic brokerage. The family's presence in the executive suite is both a strength (continuity of culture, alignment of incentives) and a concentration risk (the playbook is encoded in relationships and instincts, not just processes).
The broader management bench is deep. Gallagher's divisional leaders, many of whom came through acquisitions and rose through the organization, provide operational continuity. The company's investment in the "Gallagher Way" — its codified cultural framework — is explicitly designed to make the culture durable beyond any individual leader. Whether a cultural operating system can survive the departure of its creator is, of course, one of the oldest questions in business.
The Margin Machine
For a company that has spent twenty-three years acquiring businesses at a frenetic pace, Gallagher's margin trajectory is remarkably disciplined. The company has expanded its adjusted EBITDAC margin in the Brokerage segment from the mid-20s percent in the early 2010s to approximately 39% in 2024 — a roughly 1,400 basis points of improvement over a decade.
This margin expansion is driven by three forces. First, operating leverage: as revenue grows (through both organic and acquired channels), fixed costs — technology, compliance, corporate overhead — are spread over a larger base. Second, mix shift: the growing proportion of revenue from specialty and reinsurance lines, which carry higher margins than middle-market retail brokerage. Third, integration synergies: each acquisition absorbs onto Gallagher's shared services platform, eliminating duplicative back-office costs.
The Risk Management segment (Gallagher Bassett) runs at a lower but stable adjusted EBITDAC margin of approximately 19-20%, reflecting the more labor-intensive nature of claims administration. The corporate segment generates losses — the cost of corporate overhead, debt service, and clean energy investments — that partially offset segment profits.
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Margin Expansion Trajectory
Brokerage segment adjusted EBITDAC margins
| Year | Brokerage Revenue | Adj. EBITDAC Margin | Key Driver |
|---|
| 2015 | ~$3.5B | ~27% | International expansion scaling |
| 2018 | ~$4.7B | ~31% | Operating leverage + mix shift |
| 2021 | ~$6.5B | ~34% | Willis Re integration; hard market |
| 2023 | ~$8.5B | ~37% | Continued synergies + rate tailwinds |
|
The question is how much further margins can expand. Management has targeted 40%+ adjusted EBITDAC margins in the Brokerage segment, which would bring Gallagher closer to the margin profile of Marsh & McLennan and Aon. The AssuredPartners integration, if executed well, could accelerate this trajectory through cost synergies. If executed poorly, it could dilute margins for years.
Buried in Gallagher's financial statements is one of the stranger line items in large-cap corporate America: the Corporate segment includes significant investments in "clean energy" ventures — specifically, tax credit-generating investments in alternative energy projects, primarily involving coal-to-gas processing facilities.
These investments, made under Section 45 of the Internal Revenue Code, generated substantial tax benefits that reduced Gallagher's effective tax rate well below the statutory corporate rate for years. The strategy was creative, legal, and — to put it politely — not obviously synergistic with the core business of insurance brokerage. Critics argued that the tax engineering distorted Gallagher's earnings quality and made apples-to-apples comparisons with peers difficult. The company reported both GAAP and adjusted results that excluded the clean energy segment, but the tax benefits were real cash savings that effectively subsidized the acquisition engine.
The Section 45 credits have begun phasing out, and Gallagher has been winding down these investments. By 2025, the impact on earnings is expected to be minimal. It's a footnote, but an instructive one: even in a company defined by operational discipline, you find these small acts of financial engineering tucked into the machinery, quietly doing their work.
The Competitive Geometry
The global insurance brokerage market is structured as a clear oligopoly at the top, with a long tail of smaller firms.
Marsh & McLennan Companies sits at the apex: approximately $24 billion in revenue, a $110 billion market cap, and capabilities spanning risk, strategy, and human capital consulting through its Marsh, Guy Carpenter, Mercer, and Oliver Wyman brands. Aon follows: roughly $15 billion in revenue after its failed Willis merger forced a strategic reset, with particular strength in reinsurance (Aon Reinsurance Solutions) and human capital. Willis Towers Watson — now WTW after shedding Willis Re to Gallagher and other assets post-merger-collapse — remains a formidable competitor with approximately $10 billion in revenue.
Gallagher occupies the fourth position, a gap that the AssuredPartners deal is designed to close. Below Gallagher sit the PE-backed consolidators — Hub International, USI, Acrisure, NFP (recently acquired by Aon) — which compete aggressively for middle-market accounts and acquisition targets.
Gallagher occupies a unique position — the only publicly traded broker pursuing a high-velocity acquisition strategy with investment-grade credit. The PE-backed players have the appetite but not the currency. Marsh and Aon have the currency but not the appetite for tuck-ins at this pace.
The competitive dynamic is intensifying. Private equity has poured unprecedented capital into the sector: Acrisure alone reportedly processes over $4 billion in revenue from an entity that barely existed fifteen years ago. The availability of cheap private credit has allowed PE-backed platforms to bid aggressively for acquisition targets, pushing multiples higher. Gallagher, which historically benefited from being the "premium acquirer" — offering cultural continuity and public-company currency — now faces more competition for the same targets.
The AssuredPartners deal can be read, in part, as a response to this competitive pressure: by absorbing one of the largest PE-backed platforms, Gallagher simultaneously eliminates a competitor for acquisition targets and adds scale that widens its structural advantages.
The Culture as Moat
Here is the thing about Gallagher that is hardest to quantify and easiest to dismiss: the culture is the moat. Not the technology. Not the carrier relationships (those are replicable). Not the balance sheet (others have access to capital). The culture.
Insurance brokerage is, at its core, a relationship business. The producer — the person who advises the client, places the coverage, and manages the relationship — is the primary unit of economic value. Producers are mobile. They can, and do, move between firms, often taking their books of business with them. The brokerage industry's competitive structure means that a producer at Gallagher could field recruiting calls from Marsh, Aon, USI, and three PE-backed platforms in any given month.
Gallagher's retention rate for top producers is, by industry standards, unusually high. The company attributes this to three factors: a compensation structure that rewards collaboration (not just individual production), a culture that values long-term client relationships over short-term premium growth, and an integration model for acquired firms that preserves producer autonomy. Producers who join through acquisitions are not stripped of their identity and plugged into a faceless corporate machine. They retain their client relationships, gain access to better resources, and are invited — genuinely, not performatively — into a culture that feels more like a partnership than a conglomerate.
Is this too good to be true? Perhaps. Every company claims to have a great culture. What's distinctive about Gallagher is the empirical evidence: the retention rates, the organic growth rates, and — most tellingly — the ability to close six hundred acquisitions based substantially on the promise that sellers' employees will be well-treated. In a fragmented market where sellers have abundant options, Gallagher's reputation as a cultural steward is itself a competitive advantage in the M&A market. The culture feeds the acquisitions, which feed the culture. The flywheel is invisible, and it is the whole game.
The Compound
There is a compound interest calculation that explains Gallagher better than any strategy deck. In 2000, Gallagher generated approximately $1.5 billion in total revenue. By 2024, that figure exceeded $11 billion. Gallagher's total shareholder return over the twenty-year period ending in 2024 exceeded 3,000% — outperforming the S&P 500, Berkshire Hathaway, and most technology indices. An investor who bought $10,000 of Gallagher stock at the turn of the millennium and reinvested dividends would hold a position worth roughly $300,000.
The returns were not generated by a single brilliant bet. There was no iPhone moment. No AWS. No pivot to a new business model. The returns were generated by the disciplined, repetitive, compounding application of a single playbook: grow organically, acquire small, integrate culturally, expand margins, repeat. The genius, if that word applies, is in the repetition.
In Rolling Meadows, Illinois, in a suburban office park that most Fortune 500 CEOs would find beneath their dignity, a company that has done essentially the same thing for a quarter-century continues doing it. The parking lot fills at 7:30 AM. Producers make their calls. Integration teams onboard the latest acquisition. Somewhere, a seventy-year-old founder of a thirty-person agency in Baton Rouge signs the paperwork, shakes a Gallagher executive's hand, and says, "Take care of my people."
The handshake is the strategy.
