Aon, the global re/insurance broker, has signed a definitive agreement to acquire NFP, a middle-market property and casualty broker, benefits consultant, wealth manager and retirement plan advisor, from funds affiliated with NFP’s main capital sponsor – Madison Dearborn Partners (MDP), and funds affiliated with HPS Investment Partners.
Under the terms of the transaction, Aon will acquire NFP for a total consideration estimated to be $13.4 billion at the time of close, which will be funded by $7 billion of cash and $6.4 billion of Aon stock.
Moreover, the acquisition of NFP will play a key role in expanding Aon’s presence within the large and fast-growing middle-market segment, with capabilities across risk, benefits, wealth and retirement plan advisory.
The firm’s Aon United strategy, Aon Business Services operating platform and investments in advanced analytics has driven a long-term track record of results and once completed, this acquisition will enable the combined firms to efficiently deliver content and capabilities to the middle-market segment.
It has also been confirmed that Doug Hammond, Chairman and CEO of NFP, will continue to lead the business as an independent but connected platform within Aon, where he will report to Eric Andersen, President of Aon.
From what we understand, the transaction is expected to generate more than $2.8 billion in value creation from the capitalized value of expected pre-tax synergies and capital structure, net of ~$400 million in expected one-time transaction and integration costs.
In addition, the transaction is also expected to be dilutive to adjusted EPS in 2025, breakeven in 2026, and accretive in 2027 and beyond, with positive impacts to free cash flow estimated to begin in 2026.
Closing of the transaction is subject to customary conditions, including regulatory approvals, and is expected to occur in mid-2024.
But, financial metrics are calculated conservatively based on a June 30, 2025, closing date.
Both Aon and NFP will continue to operate independently until the closing date of the transaction.
Greg Case, CEO of Aon, commented: “We have continually evolved our leading capabilities to better serve our clients’ growing needs amidst increasing volatility across the marketplace. 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.”
Hammond, added: “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. 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.”
Andersen, said: “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. 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.”
Vahe A. Dombalagian, a member of the NFP board and managing director and financial services team co-head for MDP, said: “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. 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, added: “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. We thank Doug and the NFP team, as well as Vahe and MDP, for the extraordinary partnership over the past seven years.”
