Another major industry acquisition was announced on Wednesday with news that Aon will buy NFP. Aon will pay $13.4 billion ($7 billion in cash and $6.4 billion in stock).
The acquisition reportedly expands Aon's reach in the large and middle-market risk, benefits, wealth, and retirement plan advisory segments. The deal is expected to close in mid-2024.
NFP will be part of the firm’s Aon United strategy but will run as an "independent but connected platform." Doug Hammond, NFP’s current Chairman and CEO will report to Aon President Eric Andersen.
"The acquisition will advance our relevance to clients, create opportunities for our colleagues and further strengthen our shared cultural values," Greg Case, CEO of Aon, said in a statement. "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."
Founded in 1999 and privately held, NFP has 7,700 employees and an estimated $2.2 billion in 2023 revenue.
"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," Hammond added. "Our clients will benefit from Aon's global resources and distribution, while our people will have more opportunities to accelerate the growth of NFP."
Next Step Evolution
The deal is a "next step" in the evolution of the retirement plan space, where aggregation firms themselves begin to aggregate, according to Dick Darian, a partner with M&A advisory firm Wise Rhino.
"Aon as an aggregator makes sense for a number of reasons, including the need to go down market in retirement consulting and their historical acumen in building out participant engagement solutions," Darian said. "Importantly, [there is the] need for a larger organization with more/better talent to assist a firm like NFP with engaging and monetizing the participant—a challenge for all the retirement aggregators."
Aon claimed the deal is expected to generate more than $2.8 billion “from the capitalized value of expected pre-tax synergies and capital structure,” minus $400 million in expected one-time costs.
UBS Investment Bank served as advisor to Aon on the transaction and Citi served as a Aon's financial advisor.
The news is reminiscent of other major M&A deals recently, including The Standards acquisition of Securian Financial’s recordkeeping business, and Franklin Resources’ (Franklin Templeton) acquisition of Putnam Investments.
