The Business Services sector continued to see gains slightly above the broader market, with the Contact Center Services and Human Resources Outsourcing subsectors outperforming the S&P 500 by 6.1% and 1.9%, respectively, in Q2 2021.
- The median EBITDA multiple in the Human Resources Outsourcing subsector remained constant at 14.6x in Q2 2021, representing a 26.6% increase from Q2 2020. Primary contributors to this multiple expansion included a better-than-expected June jobs report (with the unemployment rate decreasing to 5.9%) and significant employment gains in areas that were more negatively impacted by COVID-19 (e.g., leisure, hospitality, and construction).
- Within the Contact Center Services subsector, the median EBITDA multiple was 9.8x in Q2 2021, representing a 12.1% increase from Q1 2020. The shift to the work-from-home model has enabled many contact center businesses to pivot effectively during the pandemic, with those serving industries such as Financial Services, eCommerce, and Healthcare benefiting at an even higher overall rate.
- The median EBITDA multiple for the Fixed Asset Management subsector of 13.4x remains near a historical high and is 16.7% above the Q2 2020 level. The essential nature of services, in addition to the increased importance of cleanliness, security, and recurring maintenance are underpinnings for continued strong performance in this subsector.
Positive equity market performance and ample capital availability have continued to serve as catalysts for increased sector M&A activity, with both corporate and private equity buyers competing aggressively for high-quality assets. Heading into Q3 2021, market indicators suggest that the high level of M&A activity will continue.
BGL’s Quarterly Business Services Update highlights public company operating metrics and M&A activity in the Human Resources Outsourcing, Contact Center Services, and Fixed Asset Management subsectors. BGL remains committed to informing clients of the current state of the Business Services market and discussing M&A strategies and financing alternatives.
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