Business Services

The business services landscape is fast-moving, dynamic, and diverse, and serves a rich variety of end markets. Here, senior bankers from the Harris Williams Business Services Group discuss industry trends creating M&A opportunities, which subsectors they expect to be most active this year, and how buyer dynamics are shifting. 

Which major trends are creating M&A opportunities in business services? 

The overall value proposition for outsourcing non-core business activities continues to gain momentum, driving growth and M&A opportunities across a wide range of professional, IT, and commercial and industrial services, as well as in specialty distribution. Businesses of all types have become increasingly aware of the advantages of focusing on their core expertise and relying on third-party specialists for everything else. Beyond capacity, businesses that outsource non-core activities gain access to deeper and more current knowledge in those areas than they typically possess themselves.

Which subsectors do you think will be most active in your industry? 

As noted above, there are many areas within business, commercial, and industrial services that we think will attract investor attention over the next year.

How are M&A investor dynamics shifting in your industry? 

As we often see during periods of economic uncertainty, there’s a more pronounced focus on quality, particularly regarding platforms built via M&A. Buyers are paying close attention to the degree of operational and managerial integration between acquisitions, trying to avoid businesses that seem cobbled together. This has always been the case but has been a more intense area of focus in recent months, and we expect it to continue. 

We're also seeing more infrastructure investor interest in businesses that have "infrastructure-like" qualities. This is a trend across Harris Williams as infrastructure-focused investors look to expand their universe of steady-growth businesses beyond traditional areas like roads, bridges, and utilities. In business services, those investors are attracted to companies with recurring, contractual services that cannot be deferred. There are many businesses in our industry that fit that description.