Business Combinations

3 Months Ended

Mar. 31, 2025

NOTE 5 Business Combinations

During the three months ended March 31, 2025, Brown & Brown acquired all of the stock of three insurance intermediaries and purchased assets and assumed certain liabilities of ten insurance intermediaries for a total of 13 acquisitions. Additionally, adjustments were recorded to the purchase price allocation of certain prior acquisitions completed within the last twelve months as permitted by Accounting Standards Codification (“ASC”) Topic 805 — Business Combinations (“ASC 805”).

The recorded purchase price for all acquisitions includes an estimation of the fair value of liabilities associated with any potential earn-out provisions. Subsequent changes in the fair value of earn-out obligations are recorded in the Condensed Consolidated Statements of Income when incurred. The fair value of earn-out obligations is based on the present value of the expected future payments to be made to the sellers of the acquired businesses in accordance with the provisions outlined in the respective purchase agreements.

Based on the acquisition date and the complexity of the underlying valuation work, certain amounts included in the Company’s Condensed Consolidated Financial Statements may be provisional and thus subject to further adjustments within the permitted measurement period, as defined in ASC 805.

Certain disclosures have not been presented as the effect of the acquisitions were not material to the Company's financial results.

The following table summarizes the estimated fair values of the aggregate assets and liabilities acquired through the three months ended March 31, 2025 as of the date of each acquisition and adjustments made during the measurement period of the prior year acquisitions.


(in millions)	NBS Insurance Agency			Other (1)			Total
Business Segment	Wholesale			Various
Effective date of acquisition	March 1, 2025			Various
Cash paid	$	54		$	33		$	87
Other payable		—			4			4
Recorded earn-out payable		—			5			5
Total consideration		54			42			96
Maximum potential earn-out payable		—			20			20
Allocation of purchase price:
Cash and equivalents		—			4			4
Fiduciary cash		13			3			16
Fiduciary receivables		—			19			19
Other current assets		2			—			2
Goodwill		33			22			55
Purchased customer accounts and other intangibles		17			13			30
Other assets		—			4			4
Total assets acquired		65			65			130
Fiduciary liabilities		(10	)		(19	)		(29	)
Other current liabilities		(1	)		(3	)		(4	)
Other long-term liabilities		—			(1	)		(1	)
Total liabilities assumed		(11	)		(23	)		(34	)
Net assets acquired	$	54		$	42		$	96

(1)

The other column represents a summarization of current year acquisitions with total consideration of less than $50 million per acquisition and adjustments from prior year acquisitions that were made within the permitted measurement period.

The weighted average useful life of purchased customer accounts is 15 years.

Acquisition Earn-Out Payables

As of March 31, 2025 and 2024, the fair values of the estimated acquisition earn-out payables were re-evaluated and measured at fair value on a recurring basis using unobservable inputs (Level 3) as defined in ASC 820 - Fair Value Measurement. The resulting additions, payments, and net changes, as well as the interest expense accretion on the estimated acquisition earn-out payables were as follows:


	Three months ended March 31,
(in millions)	2025			2024
Balance as of the beginning of the period	$	167		$	249
Additions to estimated acquisition earn-out payables		5			9
Payments for estimated acquisition earn-out payables		(26	)		(52	)
Subtotal		146			206
Net change in earnings from estimated acquisition earn-out payables:
Change in fair value on estimated acquisition earn-out payables		(6	)		(4	)
Interest expense accretion		2			2
Net change in earnings from estimated acquisition earn-out payables		(4	)		(2	)
Foreign currency translation adjustments during the year		1			(1	)
Balance as of March 31,	$	143		$	203

Of the $143 million of estimated acquisition earn-out payables as of March 31, 2025, $51 million was recorded as accounts payable and $92 million was recorded as other non-current liabilities. As of March 31, 2025, the maximum future acquisition contingency payments was $419 million. Four of the estimated acquisition earn-out payables include provisions with no maximum potential earn-out amount. The amount recorded for these acquisitions as of March 31, 2025 was $1 million. The Company believes a significant increase in this amount to be unlikely.