8-K: Baldwin Group to Merge with CAC Group in $1.026B Deal

The Baldwin Insurance Group will merge with CAC Group for $1.026 billion, creating the largest majority colleague-owned, publicly-traded insurance broker in the U.S. and expanding specialty capabilities.

Summary

• The Baldwin Insurance Group, Inc. (Baldwin) has entered into a definitive agreement to merge with CAC Group (CAC), a nationally recognized specialty and middle-market insurance brokerage firm.
• The total upfront consideration for the transaction is $1.026 billion, comprising $438.0 million in cash and 23,200,000 shares of Baldwin's Class A Common Stock, valued at $589.0 million based on the 30-day volume-weighted average price as of December 1, 2025.
• Additional post-closing payments include a performance-based earnout of up to $250.0 million in cash and a $70.0 million deferred cash payment, payable on the fourth anniversary of the closing.
• The transaction implies a multiple of 7.9x 2025E Pro Forma Adjusted EBITDA, inclusive of targeted full run-rate synergies, and 7.0x net of estimated deferred tax asset (DTA).
• The merger is expected to be accretive to 2025 Adjusted EPS by over 20%, based on targeted full run-rate synergies and excluding one-time integration costs and transaction expenses.
• The combined entity is projected to generate 2026 Gross Revenue in excess of $2.0 billion and Adjusted EBITDA in excess of $470.0 million.
• Baldwin will become the largest majority colleague-owned, publicly-traded insurance broker in the United States, based on Business Insurance's 2025 Top 100 U.S. Brokers list.
• The transaction is expected to be approximately net leverage neutral at closing and accelerate Baldwin's path to deleveraging through 2028.
• 17,400,000 shares of the Equity Consideration will be subject to contractual transfer restrictions, released pro rata annually over a four-year period beginning on the closing date.

Sentiment

Score: 9

Explanation: The filing announces a highly strategic and financially accretive merger that significantly enhances market position, expands capabilities, and projects strong future financial performance, with clear leadership alignment and synergy targets.

Positives

• The combination creates the largest majority colleague-owned, publicly-traded insurance broker in the U.S., enhancing market position.
• Significantly expands Baldwin's Insurance Advisory Solutions (IAS) segment with CAC's deep expertise in natural resources, private equity, real estate, senior living, education, and construction.
• Strengthens specialty product lines including Financial Lines, Transactional Liability, Cyber, and Surety, supported by CAC's industry-leading data and analytics platform.
• Expected to be over 20% accretive to 2025 Adjusted EPS, driven by targeted full run-rate synergies.
• Projected 2026 Gross Revenue exceeding $2.0 billion and Adjusted EBITDA over $470.0 million for the combined entity, indicating substantial scale.
• Expected to be net leverage neutral at close and accelerate deleveraging through 2028, maintaining financial discipline.
• Unites two colleague-centric cultures grounded in equity ownership, fostering talent attraction and retention.

Negatives

• Total integration costs are estimated to be approximately $50.0 million over three years.
• Total transaction-related expenses, inclusive of potential debt raise, are estimated at approximately $17.0 million.

Risks

• The occurrence of any event, change, or other circumstances that could give rise to the termination of the Transaction Agreement.
• The risk that governmental and regulatory approvals required for the proposed transaction may not be obtained, or may be delayed, or result in conditions that could cause the parties to abandon the transaction.
• The risk that the parties may not be able to satisfy the conditions to the proposed transaction in a timely manner or at all.
• Baldwin's ability to successfully integrate acquired businesses, including CAC, and to achieve the benefits expected from such acquisitions.
• General economic and business conditions, including changes in credit, debt, financial, currency, or capital markets.
• The potential adverse impact on Baldwin's financial condition and results of operations if expected benefits are not realized.
• Liabilities of the acquired businesses that are not known to Baldwin.
• The impact of competition and technological change.
• Existing and future regulations affecting Baldwin's business and its ability to comply with SEC rules and regulations.

Future Outlook

The Baldwin Group anticipates that the merger will significantly expand its specialty capabilities, particularly within its Insurance Advisory Solutions segment, and strengthen its position in key product lines. The combined entity is expected to achieve substantial revenue and EBITDA growth by 2026, accelerate deleveraging through 2028, and benefit from estimated synergies of approximately $60 million over three years. Management expects the transaction to be accretive to Adjusted EPS by over 20% in 2025.

Management Comments

• Trevor Baldwin, CEO of The Baldwin Group, stated: "This is a transformational moment for The Baldwin Group. This combination brings together two highly complementary firms, aligned in culture and values, yet distinct in expertise, business mix, and geographic footprint. By uniting CAC's deep specialty capabilities with Baldwin's scale and diversified platform, we create a stronger, more balanced organization that can deliver exceptional solutions for clients and unmatched opportunities for colleagues."
• Erin Lynch, CEO of CAC Group, commented: "Coming together with Baldwin gives us the scale and infrastructure to accelerate everything that makes CAC distinctive: our specialty expertise, entrepreneurial mindset, and relentless focus on client success. This merger positions us to deliver more for clients and create expanded opportunities for colleagues, while staying true to the values that have fueled our growth."

Industry Context

This merger positions The Baldwin Group as a dominant player in the U.S. insurance brokerage industry, particularly as the largest majority colleague-owned, publicly-traded firm. It reflects a broader trend of consolidation and specialization within the insurance advisory and distribution sector, where firms seek to enhance capabilities, expand geographic reach, and leverage technology to offer more comprehensive solutions to clients. The combination of Baldwin's extensive middle-market distribution with CAC's deep specialty expertise creates a formidable competitor capable of addressing diverse client needs across various industries and product lines.

Comparison to Industry Standards

• The combined entity is expected to rank as the largest majority colleague-owned, publicly-traded insurance broker in the United States, based on Business Insurance's 2025 Top 100 U.S. Brokers list, surpassing previous rankings.
• CAC Group, prior to the merger, was ranked #35 in Business Insurance's 2025 Top 100 U.S. Brokers list, indicating a strong standalone position.
• CAC Group's average organic revenue growth (CAGR 2020-LTM 6/30/25) of 29% significantly outpaces the average for public brokers (7% for 2020-2024), demonstrating superior growth performance.
• CAC Group's average LTM 6/30/25 Retained Commissions & Fees per Colleague of over $480,000 is 74% higher than the Reagan Top Quartile and BI Top 100 Median of $277,000 and $264,000 respectively, highlighting high productivity.
• The combined business is projected to have an average organic revenue growth that is double-digit and industry-leading, building on the strong individual performances of both companies.

Management Changes

Corporate Governance

Legal Proceedings

• No material pending or, to the Knowledge of the Seller, threatened, material legal or administrative Action against any member of the Company Group or any Minority Investment Entity since January 1, 2023.
• No member of the Company Group is subject to any outstanding Order that would be material to the Company Group, taken as a whole.

Related Party Transactions

• Disclosures regarding interested party transactions are set forth on Section 4.18 of the Seller Disclosure Schedule, excluding applicable Organizational Documents, indemnification/employment/compensation arrangements with Company Employees, or transactions related to the Credit Agreement.

Stakeholder Impact

• Shareholders of Baldwin: Expected to benefit from EPS accretion, expanded market leadership, and accelerated deleveraging.
• Shareholders of CAC Group (Seller): Will receive a combination of cash and Baldwin Class A Common Stock, with a portion of shares subject to lock-up restrictions, and potential future earnout and deferred payments.
• Employees/Colleagues: The combined entity will comprise nearly 5,000 colleagues, with CAC leadership representation in the go-forward business. Retained employees will receive comparable base salary/wages and target annual cash bonuses/commissions until at least March 28, 2026, and comparable benefits for 12 months post-closing.
• Customers: Expected to benefit from expanded specialty capabilities, advanced solutions, and a broader distribution platform.
• Creditors: The transaction is expected to be net leverage neutral at close, with a stated long-term net leverage target of 3.0-4.0x, suggesting a stable credit profile.

Next Steps

• Satisfaction or waiver of customary closing conditions and regulatory approvals (e.g., HSR Act waiting period expiration/termination).
• Closing of the transaction, expected in the first quarter of 2026.
• Baldwin to host an investor call on December 3, 2025, to discuss the partnership.
• Seller Group to designate one Class III director and one board observer to Baldwin's board, effective immediately following closing.
• Baldwin to file a Form 8-K or Form 8-K/A including required financial statements and a Shelf Registration Statement for resale of shares within five business days after closing or receipt of necessary financial information.

Key Dates

Recommendation

The acquisition of CAC Group by The Baldwin Insurance Group is a highly strategic and financially compelling move. The transaction is expected to be significantly accretive to Adjusted EPS, creates the largest majority colleague-owned publicly-traded insurance broker, and expands Baldwin's specialty capabilities into high-growth areas. The projected revenue and EBITDA growth for the combined entity are substantial, and the deal is structured to be leverage-neutral at closing while accelerating deleveraging. The alignment of cultures and leadership, coupled with identified synergies, suggests strong potential for long-term value creation for shareholders.

Keywords

Insurance Brokerage, Acquisition, Merger, SEC Filing, Financial Services, Specialty Insurance, Corporate Governance, Earnings Accretion, Synergies, Risk Management