The largest brokerage acquisition so far this year does notsignal a change in merger and acquisition strategy for insurancebroker Brown & Brown, says its CEO, but it could set the tonefor future private equity firm deals says an industryconsultant.

Last week, Daytona Beach, Fla.-based insurance broker Brown& Brown announced its intent to acquire Atlanta-based BeecherCarlson Holdings Inc. for $336.5 million in cash from privateequity firm Austin Ventures, FSPM and a group of individualemployee and non-employee equity holders.

Over the years, Brown & Brown—which reported revenues lastyear of $1.2 billion—has built itself through a series ofacquisitions of small- to mid-size agencies, avoiding theblockbuster deals of other major brokerage firms. However, in 2011,it made a major move acquiring the managing general agency Arrowhead for $400 million and now made a second majoracquisition with Beecher Carlson.

During a conference call with investment analysts, CEO andPresident J. Powell Brown says the firm remains committed toacquiring the small $2 million to $8 million firms that are outthere, but Beecher Carlson was an opportunity it could not passup.

“Someone on the call may ask the question ‘Why BeecherCarlson?’” says Brown. “I will tell you that we approached thisacquisition just like any other acquisition—we start with theconcept of good people and good people run and develop goodbusinesses and attract more high quality people.”

Brown says the executives from both companies began meeting inDecember and that led to the feeling there would be “somegreat opportunities to work together.”

Phil Trem, vice president of M&A for the agency consultingfirm MarshBerry, says while the deal may be a little out ofcharacter for Brown & Brown it was a strategic opportunity theyfelt they could not let go by. With the acquisition of Arrowhead,Beecher Carlson offered opportunities to expand the MGA businesswhile offering a toe hold into large accounts.

Beecher Carlson, which produced $105 million in revenue lastyear, is comprised primarily of three businesses: large account,OnPoint and agency. The large account business, which makes up 65percent of its revenues, delivers P&C brokerage and riskmanagement services to Fortune 2000 businesses. OnPoint, making up10 percent of the business, is an MGA to niche P&C insuranceprograms primarily underwriting Tribal and construction relatedrisks. The Tribal business concentrates on insuring Tribal casinos.Finally, agency, making up the remaining 25 percent of revenues,provides P&C, employee benefits products and services to middlemarket and individual personal lines clients.

Under terms of the agreement, scheduled to conclude in July, thelarge account business will remain untouched and based in Atlanta.The agency, middle-market offices in Oregon, Arizona andMississippi will become part of the existing Brown & BrownRetail division. The OnPoint programs will become part of Brown& Brown’s National Programs division.

Steve Denton, Beecher Carlson’s current president, will become aregional vice president of Brown & Brown and serve as CEO ofBeecher Carlson. Dan Donovan, Beecher Carlson’s CEO will be namedexecutive chairman of Beecher Carlson.

M&A activity has quieted over the past few months. Industryobservers say that much of the inactivity is the fallout from thepush to get deals done at the end of last year to avoid increasedcapital gains tax in 2013.

Trem says MarshBerry’s analysis shows broker M&A iswell off the pace of last year, with only 50 through the first fourmonths of this year, 26 behind the same period last year. He addsthis is Brown & Brown’s first acquisition of 2013, unusual fora firm that averages 17 deals a year.

The Beecher Carlson deal may also be a barometer for otherprivate equity investors looking to cash-in their insurancebrokerage investments or seeking a home for their capital, saysTrem.

“We can expect to see continued movement among the top 100insurance brokers,” Trem says, where some may be purchasers andothers sellers. But it is a seller’s market and the best evidencehe points to is what Brown & Brown paid, three times overrevenue and 10 times over EBITDA.

“This is way above market trend, but a deal this size, you pay apremium,” says Trem.