Arthur J. Gallagher & Co. Announces Agreement to Acquire Woodruff Sawyer

Rhea-AI Summary

Arthur J. Gallagher & Co. (NYSE:AJG) has announced a definitive agreement to acquire Woodruff Sawyer, a San Francisco-based insurance provider, for $1.2 billion. The acquisition is expected to close in Q2 2025, pending regulatory approval.

Woodruff Sawyer, with operations across 14 US offices and one UK location, specializes in commercial property/casualty products, employee benefits solutions, and risk management services. The company generated pro forma revenues of $268 million and EBITDAC of $88 million for the trailing 12 months ended December 31, 2024.

The integration and non-cash management retention costs are projected at $150 million over three years. The Woodruff Sawyer team of over 600 professionals, led by Andy Barrengos, will operate under Peter Doyle, head of Gallagher's US retail property/casualty brokerage operations.

Positive

• Strategic acquisition expanding market presence with 14 US offices and 1 UK office
• Adds $268M in revenue and $88M in EBITDAC
• Enhances expertise in management liability, construction and real estate sectors
• Strengthens middle and large market client capabilities

Negative

• High acquisition cost of $1.2B requiring significant capital deployment
• Substantial integration costs of $150M over 3 years
• Regulatory approval pending - potential closing delay risk
• Integration risks with 600+ new employees

Insights

Financial Analyst

Arthur J. Gallagher's $1.2 billion acquisition of Woodruff Sawyer represents a strategic expansion of their insurance brokerage operations with compelling financial metrics. Based on the disclosed figures, Gallagher is paying approximately 4.5x trailing revenues and 13.6x EBITDAC (including expected synergies), which appears reasonable for a high-quality asset in the insurance brokerage sector.

Notably, Woodruff Sawyer maintains an impressive 33% EBITDAC margin, significantly above industry averages, indicating Gallagher is acquiring a well-managed, profitable operation. The integration costs and retention expenses totaling $150 million over three years seem appropriate given the scale of adding over 600 professionals and the importance of retaining key talent in knowledge-based businesses.

This acquisition strengthens Gallagher's position in specialized niches including management liability, construction, and real estate, while expanding their geographic footprint with 14 US offices and a UK presence. The complementary expertise should create cross-selling opportunities across their combined client base. The expected Q2 2025 closing timeline provides adequate runway for integration planning, though regulatory approval remains a contingency factor that investors should monitor.

Insurance Industry Expert

This acquisition significantly enhances Gallagher's competitive positioning in the middle and large market segments where Woodruff Sawyer has established expertise. The insurance brokerage industry continues consolidating, and this move allows Gallagher to acquire specialized capabilities rather than building them organically – particularly valuable in management liability, construction, and real estate sectors where deep domain knowledge is essential.

The cultural alignment emphasized by both CEOs is critical for success in service-based acquisitions. Insurance brokerage value resides primarily in human capital, making retention of the 600+ Woodruff Sawyer professionals paramount. The $150 million allocated for integration and retention incentives acknowledges this reality.

From a client perspective, the combined entity offers expanded resources while maintaining specialized expertise. Woodruff Sawyer clients gain access to Gallagher's global platform, while Gallagher enhances its specialized service capabilities. The deal structure appears calibrated to preserve Woodruff Sawyer's strengths while integrating operations under Gallagher's retail property/casualty brokerage division led by Peter Doyle, creating a clear organizational framework for the merged operations.

ROLLING MEADOWS, Ill., March 4, 2025 /PRNewswire/ -- Arthur J. Gallagher & Co. today announced it has signed a definitive agreement to acquire San Francisco, California-based Woodruff Sawyer. The transaction is subject to regulatory approval and is expected to close during the second quarter of 2025.

Woodruff Sawyer provides a full suite of commercial property/casualty products, employee benefits solutions and risk management services with a focus on middle and large market clients. Operating from 14 US offices and one UK office, Woodruff Sawyer has expertise in management liability, construction and real estate. The Woodruff Sawyer team, led by Andy Barrengos, will operate under the direction of Peter Doyle, head of Gallagher's US retail property/casualty brokerage operations.

"Woodruff Sawyer has an outstanding reputation in our industry, and we have long admired their niche expertise and client-focused culture. Our complementary strengths will enhance the value we deliver to our clients and significantly expand our capabilities," said J. Patrick Gallagher, Jr., Chairman and CEO. "I look forward to welcoming Andy and the more than 600 Woodruff Sawyer colleagues to our growing Gallagher family of professionals."

Andy Barrengos, Chairman and CEO of Woodruff Sawyer, added: "We are thrilled to join Gallagher, who shares our deep commitment to employees and has a culture defined by integrity, trust and excellence. We look forward to leveraging our complementary expertise and Gallagher's substantial global capabilities to provide outstanding support for our clients."

Financial Terms
Woodruff Sawyer pro forma revenues and EBITDAC (including expected synergies) for the trailing 12 months ended December 31, 2024 were approximately $268 million and $88 million, respectively. Under the agreement, Gallagher will acquire Woodruff Sawyer for consideration of $1.2 billion. Integration costs and expected non-cash management retention costs are expected to total $150 million over the next 3 years.

Information Regarding Forward-Looking Statements
This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements relate to expectations or forecasts of future events and use words such as "anticipate," "believe," "estimate," "expect," "contemplate," "forecast," "project," "intend," "plan," "potential," and other similar terms, and future or conditional tense verbs like "could," "may," "might," "see," "should," "will" and "would." Examples of forward-looking statements in this press release include, but are not limited to, statements regarding the expected timing of the completion of the acquisition, the benefits of the proposed acquisition with respect to our client offerings and value proposition, among other expected benefits, the expected consideration to be paid, the expected revenue and EBITDAC impacts of the acquisition, the expected synergies, required regulatory approvals and the expected expense of integration.

Actual results may differ materially from the estimates set forth herein.  Readers are cautioned against relying on any of the forward-looking statements, which are neither statements of historical fact nor guarantees or assurances of future performance.  Important factors that could cause actual results to differ materially from those in the forward-looking statements include risks related to the integration of the acquired operations, businesses and assets into Gallagher; the possibility that the anticipated benefits of the proposed transaction, including cost savings and expected synergies, are not realized when expected or at all, including as a result of the impact of, or issues arising from, the integration of the acquired operations into Gallagher; the possibility that the proposed transaction is not completed when expected or at all because required regulatory approvals are not received or other conditions to the closing are not satisfied on a timely basis or at all; the risk that Gallagher's free cash generation is insufficient; potential adverse reactions or changes to business or employee relationships, including those resulting from the announcement or completion of the proposed transaction; conditions imposed in order to obtain required regulatory approvals; the possibility that the proposed transaction may be more expensive to complete than anticipated, including as a result of unexpected factors or events; diversion of management's attention from ongoing business operations and opportunities; the inability to retain certain key employees of the acquired operations or Gallagher; competitive and market responses to the proposed transaction; financial information subsequently presented for the acquired business in Gallagher's subsequent public filings may be different from that presented herein, and additional factors discussed in the section entitled "Information Concerning Forward-Looking Statements" and "Risk Factors" in Gallagher's Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

Any forward-looking statements speak only as of the date that they are made, and we do not undertake any obligation to update any such statements or release publicly any revisions to these forward-looking statements to reflect events or circumstances after the date of this report or to reflect new information, future or unexpected events or otherwise, except as required by applicable law or regulation.

Non-GAAP Measures 
In addition to reporting financial results in accordance with GAAP, this press release provides information regarding EBITDAC.  These measures are not in accordance with, or an alternative to, the GAAP information provided in this press release.  Gallagher believes that EBITDAC provides a meaningful representation of its operating performance and improves the comparability of Gallagher's results between periods by eliminating the impact of certain items that have a high degree of variability.  EBITDAC is defined as net earnings before interest, income taxes, depreciation, amortization and the change in estimated acquisition earnout payables.  Please see "Reconciliation of Non-GAAP Measures" on Gallagher's website at www.ajg.com under "Investor Relations" for the purpose of this measure.

This press release is neither an offer to sell nor a solicitation of an offer to buy any security of Gallagher, nor shall there be any sale of a security in any jurisdiction in which such an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.

About Arthur J. Gallagher & Co.
Arthur J. Gallagher & Co. (NYSE:AJG), a global insurance brokerage, risk management and consulting services firm, is headquartered in Rolling Meadows, Illinois. Gallagher provides these services in approximately 130 countries around the world through its owned operations and a network of correspondent brokers and consultants.

Investors:	Media:
Ray Iardella	Paul Day
VP - Investor Relations	Senior Media Relations Manager
630-285-3661/ ray_iardella@ajg.com	630-285-5946/ paul_day1@ajg.com

 

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SOURCE Arthur J. Gallagher & Co.

FAQ

What is the acquisition price for Woodruff Sawyer by AJG?

Arthur J. Gallagher & Co. will acquire Woodruff Sawyer for $1.2 billion.

When will AJG complete the Woodruff Sawyer acquisition?

The acquisition is expected to close during the second quarter of 2025, subject to regulatory approval.

What are Woodruff Sawyer's financial metrics for the trailing 12 months?

Woodruff Sawyer's pro forma revenues were $268 million and EBITDAC was $88 million for the trailing 12 months ended December 31, 2024.

How much will AJG spend on integration costs for the Woodruff Sawyer acquisition?

Integration costs and non-cash management retention costs are expected to total $150 million over the next 3 years.

How many employees will join AJG from Woodruff Sawyer?

More than 600 Woodruff Sawyer colleagues will join the Gallagher team.