- Revenue Growth: Q4 revenue surged 30% YoY (organic +5%) and 2025 full-year organic growth hit 6%, with $3.5B in acquired revenue from M&A.
- Adjusted EBITDA Momentum: Q4 adjusted EBITDA rose 30%, marking 23 consecutive quarters of double-digit growth, while margins expanded 70 bps to 35% in 2025.
- M&A Pipeline: 40+ term sheets in 2025 ($350M annualized revenue pipeline) and 71,000+ employees post-Assured Partners acquisition, targeting 75+ annual M&A deals globally.
- Employee Benefits Outlook: 4% organic growth expected in 2026, driven by rising healthcare costs (7-8% medical inflation) and increased advisory demand for cost management solutions.
- Cash Position & Synergies: $10B in cash reserves for 2025-2026 M&A, plus $73B tax credit carryforwards and $1B in Assured Partners tax benefits to fund future deals.
Segment Performance
The brokerage segment was a key driver of growth, with revenue increasing by 38% and organic growth of 5%. The risk management segment, Gallagher Bassett, also performed well, with revenue growth of 13%, including organic growth of 7%. The employee benefits segment continued to see strong demand, with medical costs expected to rise by high single digits in 2026.
Outlook and Guidance
Gallagher expects another strong year of growth in 2026, with brokerage segment organic growth projected to be around 5.5%. The company also expects margin expansion, with adjusted EBITDAC margin expected to be in the 21-22% range. The company's M&A pipeline remains robust, with over 40 term sheets signed or being prepared, representing around $350 million of annualized revenue.
Valuation and Metrics
With a P/E Ratio of 43.46 and an EV/EBITDA ratio of 17.43, the market appears to be pricing in significant growth expectations. The company's ROE of 6.5% and ROIC of 5.28% indicate a relatively efficient use of capital. Analysts estimate revenue growth of 9.9% for the next year, which is in line with the company's historical performance. As the company continues to execute on its M&A strategy and drive organic growth, investors will be watching to see if the company can meet or exceed these expectations.
M&A Strategy
Gallagher's M&A strategy has been a key driver of growth, with the company completing seven new mergers in Q4, representing around $145 million of estimated annualized revenue. The company's pipeline remains robust, with a focus on acquiring smaller brokers and expanding its global presence. As J. Patrick Gallagher noted, "We have a unique opportunity to acquire smaller brokers... and we have a global practice with a global opportunity."