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Greg Case. Credit: Jeff Kowalsky/Bloomberg

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Aon to Buy Wealthspire Parent NFP for $13.4B

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What You Need to Know

  • Madison Dearborn Partners, a private equity firm, acquired NFP for $1.3 billion in 2013.
  • The deal may assign the wealth management arm a value of about $5,100 per $1 million in assets.
  • During a conference call, Aon executives focused on the value of NFP relationships with midsize businesses.

Aon announced today that it has agreed to buy NFP, the parent of Wealthspire, from Madison Dearborn Partners for $13.4 billion in stock and cash.

Aon included NFP’s role as a wealth and retirement plan advisory firm in the deal announcement headline. In the body of the announcement and during a conference call with securities analysts held to discuss the deal, Aon executives focused mostly on NFP’s property-casualty and employee benefits brokerage services.

NFP is the 13th largest U.S. insurance broker, according to Fitch Ratings. The firm’s wealth management and retirement plan advisory businesses will generate about 17% of NFP’s 2023 revenue. The businesses have about $50 billion in assets under management and $400 billion in assets under advisement, according to an Aon conference call slide deck.

If 17% of the deal price covers the cost of acquiring the wealth and retirement businesses, then Aon is valuing those businesses at about $5,100 per $1 million of assets under management or advisement.

Greg Case, Aon’s CEO, said during the conference call that he sees the NFP deal as a way to get Aon’s risk management content and data analytics tools into the hands of midsize businesses.

“The need is massive,” Case said, saying midsize companies need help coping with issues such as cybersecurity, medical cost inflation, supply-chain risk and climate change.

What it means: The proposed Aon-NFP deal shows that selling a financial services distribution firm is still possible, in spite of recent increases in interest rates and talk about cautious capital markets.

The players: Aon is a Dublin-based insurance broker that reported $467 million in net income on $3 billion in revenue for the third quarter.

NFP is a financial advisory and insurance brokerage firm that was founded in 1999 with backing from Apollo Global Management. Jessica Bibliowicz, the president and CEO, used acquisitions to turn the company into a public company.

Madison Dearborn Partners, a Chicago-based investment firm, acquired NFP for $1.3 billion in 2013.

Filings with the Secuirities and Exchange Commission show that NFP’s retirement arm has about 2,075 ordinary individual clients, 890 high-net-worth individual clients and 2,197 institutional clients, with an average of about $287,000 in assets per ordinary individual client, $446,000 per high-net-worth client and $34 million per institutional client.

NFP Retirement has between 251 and 500 financial planning clients.

Wealthspire has 3,845 ordinary individual clients, 3,171 high-net-worth clients and 100 institutional clients, with an average of about $372,000 in assets per ordinary individual client, $4.7 million per high-net-worth client and $4.1 million per institutional client. It had $20.5 billion in assets under management as of Sept. 30.

The deal: The deal price includes $6.4 billion in Aon stock and $7 billion in cash. Aon plans to raise $5 billion for the deal in 2024 and provide the other $2 billion at closing, Christa Davies, Aon’s chief financial officer, said during the conference call.

Aon hopes to close on the deal by the end of 2024, but Davies said company performance projections include the possibility that the deal could close in mid-2025.

NFP has about 7,700 employees. Case said he expects completion of the deal to lead to “modest cost savings.”

Insurance distributor deals can be tough to complete: Aon itself called off a merger with Willis in 2021, after U.S. antitrust regulators objected.

Fitch’s assessment: In September, analysts at Fitch Ratings assigned NFP a long-term issuer default rating of B, with a stable outlook.

Fitch noted that NFP is in a stable business but had a relatively high debt level for companies at its rating level, due in part to moves to invest excess cash in mergers and acquisitions and to use debt to help pay for them.

“If the company were to significantly slow M&A, Fitch believes cash flow generation would improve materially,” Fitch said.

Greg Case. Credit: Jeff Kowalsky/Bloomberg


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