GCG’s Q1 2023 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 Q1 2023, public equities across most segments of the Business Services sector that GCG tracks outpaced the broader U.S. equity market. As outsourcing trends continue to be positive, companies that are well-positioned with their customers that value consistency, and in many cases reliability over price, are experiencing even better performance.
- On a 3-year period ending March 31, 2023, the S&P 500 has returned 65.1%. Segments such as Infrastructure Services, HR/Staffing, Facility Services, and Environmental & Waste Services were among the leading performers, returning 188.6%, 112.5%, 110.9%, and 96.6%, respectively.
- The volume of M&A activity in the Business Services sector saw an increase during Q1 2023, with 141 deals closed, versus 134 in Q4 2022. The average deal value decreased by 26.9% over the prior quarter.
- Trading multiples varied significantly across and within the six categories, with the strongest multiples observed in the Residential, Commercial, and Industrial services and Environmental & Waste Services categories with average EBITDA multiples of 12.7x and 12.6x, respectively.
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