After completing seven deals this year, Digital Insurance Inc. still has its sights on buying possibly three more small employee-benefits agencies before 2013 is out.

"It is our intention to complete six to 10 acquisitions a year as long as we can find firms that fit our selective criteria," Michael Sullivan (pictured), executive vice president, tells Mergers & Acquisitions. "We think we can continue this pace for many years to come."

A stand-out in a consolidating sector, the Atlanta company - a subsidiary of Fidelity National Financial Inc. (NYSE:FNF) since December 2012 - acquires insurance agencies that work for small- and medium-sized businesses that need to find benefits package for their employees.

Digital's largest deal was for Ovation Benefits, announced in September. Other announced deals included Turnkey Benefits Solutions Inc. in August; Berg Andonian Inc. in July; Fallick Insurance Services Inc. in May; and Group Brokerage Insurance, Benefit Services & Design Inc. and Capital Benefits Group, all in February.

Expansion via M&A and organic growth is essential, Sullivan explains, especially when debt is relatively cheap and an industry is undergoing rapid consolidation.

"The employee benefits brokerage business has been tremendously fragmented, with tens of thousands of firms doing business across the country," he adds. "This is changing dramatically. Health care reform is shifting the 'math' of our business. Efficiency and operational scale and scope are essential to survive."

Many of these are asset purchase transactions, in which the acquired business is integrated into Digital's operational structure. The acquired companies gain improved profitability and efficiencies, as well as flexibility to concentrate on their own business. Digital helps these small employers gain access to price advantages and health insurance coverage typically available through larger companies.

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