GCG’s Q4 2021 Business Services Industry Update provides an overview of the latest trends in the sector, including recent performance, valuation multiples, and the state of the middle-market M&A environment.
Key findings include the following:
- In Q4 2021, public equities across the majority of the Business Services sector saw relatively strong gains compared to the broader U.S. equity market. The sector continues to be fueled by strong demand for the critical service or maintenance requirements many companies operating in the sector provide, along with business models that are proving to be sustainable throughout the current market environment.
- On a 3-year period ending December 31, the S&P 500 has returned 88.2%. Sectors such as Infrastructure Services, Real Estate Services, and Environmental & Waste Services have outpaced the S&P 500 returning 134.6%, 116.4%, and 93.9%, respectively.
- The volume of M&A activity in the Business Services sector continued to trend positively in Q4 2021 with 182 deals closed, versus 172 during the prior quarter, and the average deal value remained relatively consistent.
- Trading multiples varied significantly across and within the six categories with the strongest multiples observed in the Residential, Commercial, and Industrial Services category with a median EBITDA multiple of 13.8x.
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