Mergers and Acquisitions |
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| Business Combination, Asset Acquisition, and Joint Venture Formation [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Mergers and Acquisitions |
Mergers and Acquisitions 2024 Acquisitions
On May 1, 2024, the Company completed the acquisition of Castel Underwriting Agencies Limited (“Castel”), a managing
general underwriting platform headquartered in London, England, for cash consideration of $247.6 million, $2.2 million of
RYAN Class A common stock, and contingently returnable consideration of $4.9 million.
On August 30, 2024, the Company completed the acquisition of US Assure Insurance Services of Florida, Inc. (“US
Assure”), a program specializing in builder’s risk insurance headquartered in Jacksonville, Florida, for cash consideration
of $1,079.8 million and contingent consideration of $103.8 million.
On September 1, 2024, the Company completed the acquisition of certain assets of Greenhill Underwriting Insurance
Services, LLC (“Greenhill”), an MGU focused on the allied health industry headquartered in Houston, Texas, for cash
consideration of $11.7 million.
On September 13, 2024, the Company completed the acquisition of the Property and Casualty (“P&C”) MGUs owned by
Ethos Specialty Insurance, LLC (“Ethos P&C”) for cash consideration of $44.0 million. Ethos P&C is composed of eight
programs which underwrite on behalf of insurance carriers.
The $103.8 million of contingent consideration liabilities and $4.9 million of contingently returnable consideration
established for the acquisitions that occurred during the nine months ended September 30, 2024, were measured at the
estimated acquisition date fair value and were non-cash investing transactions. These arrangements are based on specified
revenue or EBITDA targets over the next three fiscal years.
The following table summarizes the estimated fair value of the aggregate assets and liabilities acquired during the nine
months ended September 30, 2024:
1 The acquired customer relationships have a weighted average amortization period of 13.8 years.
2 Includes a correction of an error to the purchase price allocation for the Castel acquisition, which resulted in an increase
to Deferred tax liabilities and Goodwill of $24.6 million. The table above shows the deferred tax liabilities net of deferred
tax assets of $2.8 million.
Estimated tax deductible goodwill of $545.6 million was generated as a result of the acquisitions above. The Company
recognized acquisition-related expenses, which include advisory, legal, accounting, valuation, and other costs related to
diligence, for the acquisitions above of $5.3 million and $11.4 million during the three and nine months ended
September 30, 2024, respectively, in General and administrative expense on the Consolidated Statements of Income (Loss).
In conjunction with the closing of the Castel acquisition, the deal-contingent foreign currency forward (the “Deal-
Contingent Forward”), as described in Note 11, Derivatives, was settled.
The Company recognized an aggregate $24.5 million and $33.8 million of revenue related to the acquisitions above from
their respective acquisition dates for the three and nine months ended September 30, 2024, respectively.
2023 Acquisitions
On January 3, 2023, the Company completed the acquisition of certain assets of Griffin Underwriting Services (“Griffin”),
a binding authority specialist and wholesale insurance broker headquartered in Bellevue, Washington, for cash
consideration of $115.5 million.
On July 1, 2023, the Company completed the acquisitions of certain assets of ACE Benefit Partners, Inc. (“ACE”), a
medical stop loss general agent headquartered in Eagle, Idaho, and Point6 Healthcare, LLC (“Point6”), a distributor of
medical stop loss insurance on behalf of retail brokers and third-party administrators headquartered in Plano, Texas, for an
aggregate $46.8 million of cash consideration and $2.3 million of contingent consideration. During nine months ended
September 30, 2024, a measurement period adjustment related to the initial valuation of contingent consideration of $0.6
million was recognized in Goodwill on the Consolidated Balance Sheets.
On July 3, 2023, the Company completed the acquisition of Socius Insurance Services (“Socius”), a national wholesale
insurance broker headquartered in Northern California, for $253.5 million of cash consideration, $5.8 million of contingent
consideration, and $2.7 million of RYAN Class A common stock.
On December 1, 2023, the Company completed the acquisition of AccuRisk Holdings, LLC (“AccuRisk”), a medical stop
loss MGU headquartered in Chicago, Illinois, for $98.3 million of cash consideration. During the nine months ended
September 30, 2024, a measurement period adjustment related to the initial valuation of contingent consideration of $0.3
million was recognized in Goodwill on the Consolidated Balance Sheets.
Estimates and assumptions used in the acquisition valuations are subject to change within the measurement period up to
one year from each acquisition date.
Unaudited Pro Forma Financial Information
The following unaudited pro forma financial information presents the combined results of operations of the Company as if
the 2024 and 2023 acquisitions, excluding Griffin as it is already included in the results of all periods presented, occurred
on January 1, 2023. The unaudited pro forma financial information is presented for informational purposes only and is not
indicative of the results of operations that would have been achieved if the acquisitions had taken place on the date
indicated or of results that may occur in the future. The pre-acquisition Castel and US Assure results included in the pro
forma figures below contain acquisition-related expenses that were not considered pro forma adjustments for the Company.
The unaudited pro forma financial information includes adjustments of (i) incremental amortization expense on acquired
intangible assets of $12.5 million and $28.3 million for the three months ended September 30, 2024 and 2023, respectively,
and $61.4 million and $89.5 million for the nine months ended September 30, 2024 and 2023, respectively, (ii) a decrease
in transaction costs, including the loss related to the Deal-Contingent Forward for pro forma purposes, of $5.3 million and
$16.2 million for the three and nine months ended September 30, 2024, respectively, and an increase in such costs of $7.7
million for the nine months ended September 30, 2023, (iii) a decrease in financing costs and interest expense resulting
from the debt activity related to the US Assure acquisition of $23.9 million for the three months ended September 30, 2024
and an increase in such costs of $11.0 million and $63.0 million for the three and nine months ended September 30, 2023,
respectively, (iv) a decrease of $20.7 million of income tax expense related to the common control reorganizations as part
of the Socius acquisition for the three months ended September 30, 2023, and (v) incremental tax expenses related to the
pro forma adjustments of $8.9 million and $4.0 million for the three months ended September 30, 2024 and 2023,
respectively, and $3.3 million and $19.7 million for the nine months ended September 30, 2024 and 2023, respectively.
Contingent Consideration
Total consideration for certain acquisitions includes contingent consideration or contingently returnable consideration,
which are generally based on the EBITDA or revenue of the acquired business following a defined period after purchase.
Further information regarding fair value measurements of contingent consideration and contingently returnable
consideration is detailed in Note 13, Fair Value Measurements. The Company recognizes income or loss for the changes in
fair value of estimated contingent consideration and contingently returnable consideration within Change in contingent
consideration, and recognizes accretion of the discount on these assets or liabilities within Interest expense, net, on the
Consolidated Statements of Income (Loss). The table below summarizes the amounts recognized:
As of September 30, 2024, the aggregate amounts of maximum consideration related to acquisitions were $483.1 million
related to contingent consideration and $20.1 million related to contingently returnable consideration.
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