The move signifies Aon’s strategic expansion into the large and rapidly growing middle-market segment, with a focus on enhancing distribution through its Aon Business Services platform.

According to reports, the acquisition, structured as a definitive agreement, reflects Aon’s commitment to delivering increased value to clients by combining forces with NFP. With a purchase price estimated at $13.4 billion at the time of close, the deal represents a substantial investment in Aon’s future growth and is calculated at approximately 15 times the seller-adjusted estimated EBITDA at closing.Under the terms of the agreement, NFP will operate as an independent but connected platform, adopting the market identity “NFP, an Aon company.” This strategic alignment aims to capitalise on the shared values of both organisations, emphasising client excellence, colleague opportunity, and fostering a unified mindset.

Doug Hammond, the current chairman and CEO of NFP, will continue to lead the business within Aon, reporting directly to Eric Andersen, the President of Aon. The acquisition not only positions Aon for long-term EPS accretion but also contributes to a robust combined free cash flow profile, driven by ongoing revenue growth and synergies resulting from the collaboration of the two industry leaders.With this significant step, Aon anticipates leveraging its Aon United strategy, Aon Business Services operating platform, and investments in advanced analytics to efficiently deliver tailored content and capabilities to the middle-market segment. The acquisition is poised to further solidify Aon’s position as a key player in the evolving landscape of professional services and insurance solutions.

Anticipated Timeline and Financial Implications of Aon’s Acquisition of NFP

The completion of the transaction is contingent upon meeting customary conditions, including regulatory approvals, with an anticipated closing in mid-2024. Notably, financial metrics are conservatively calculated, projecting a closing date based on June 30, 2025. Aon and NFP will maintain independent operations until the specified closing date.

Shareholder Value Creation and Financial Outlook

The transaction is poised to yield substantial shareholder value, generating over $2.8 billion in value creation. This calculation incorporates the capitalised value of anticipated pre-tax synergies and capital structure adjustments, offset by approximately $400 million in expected one-time transaction and integration costs. Although the transaction is expected to be dilutive to adjusted EPS in 2025, it is projected to reach breakeven in 2026 and become accretive in 2027 and beyond. Positive impacts on free cash flow are anticipated to commence in 2026.

The move aligns with Aon’s overarching Aon United strategy, following the recent announcement of a restructuring charge of approximately $900 million. This restructuring initiative is forecasted to deliver around $350 million in annual, run-rate savings by the conclusion of 2026. Despite short-term adjustments, Aon maintains a steadfast commitment to long-term financial goals, including mid-single or greater organic revenue growth, expanded adjusted operating margins, and sustained double-digit free cash flow.

Speaking about the news, Greg Case, CEO of Aon, said: “We have continually evolved our leading capabilities to better serve our clients’ growing needs amidst increasing volatility across the marketplace.”

He continued: “The acquisition will advance our relevance to clients, create opportunities for our colleagues and further strengthen our shared cultural values. Doug and NFP have built an exceptional team, with a complementary one-firm mindset, and we expect to both learn from their entrepreneurial culture and share with them the depth and breadth of our capabilities to create more value for clients, colleagues and shareholders.”

NFP: a leading brokerage in P&C

A frontrunner in property and casualty brokerage, benefits consulting, wealth management, and retirement plan consulting, NFP boasts a team of over 7,700 dedicated colleagues. Leveraging robust local connections and a people-centric ethos centered around well-being, belonging, and impact, NFP aids both companies and individuals in navigating their paramount challenges related to risk, workforce, wealth management, and retirement. Established in 1999 and operating as a privately held entity, NFP perceives Aon as an optimal partner to foster growth and cater to the evolving needs of its diverse clientele.

“This is an exciting milestone in NFP’s evolution that reflects the tremendous quality of the business we’ve built and the exceptional people who drive our success,” Doug Hammond said. “Aon is an industry leader in delivering Risk Capital and Human Capital capabilities and this acquisition is compelling for many reasons. Our clients will benefit from Aon’s global resources and distribution, while our people will have more opportunities to accelerate the growth of NFP. With aligned values and capabilities across different-sized market segments, we look forward to working with the Aon team to elevate performance and make the transaction successful for everyone involved.”

“NFP has one of the most high-performing leadership teams and cultures that I’ve come across in the marketplace in my 30-plus years in the business,” commented Andersen. “NFP’s team shares our one-firm mindset and commitments to client excellence and growth, and I’m looking forward to working with Doug and all the colleagues at NFP when they join our firm as an Aon company.”

“NFP has exceeded our expectations in every way over the past decade and is well positioned for more growth and impact as part of Aon,” said Vahe A. Dombalagian, a member of the NFP board and managing director and financial services team co-head for MDP.

“NFP’s diversified business, exceptional culture, and consultative approach to helping clients will be an outstanding addition to Aon. MDP is grateful to Scot French and HPS for their partnership as well as Doug, NFP’s management team and colleagues for the value they’ve created and we believe will create in the future as an Aon company.”

Scot French, a member of the NFP board and governing partner at HPS Investment Partners, said: “NFP has done an outstanding job of scaling the platform while maintaining a steadfast focus on serving its clients. We believe NFP’s differentiated business model and commitment to clients will be highly complementary with Aon’s platform.”

He added: “We thank Doug and the NFP team, as well as Vahe and MDP, for the extraordinary partnership over the past seven years.”

Source: NFP