The value of merger and acquisition (M&A) deals in the facilities management sector rebounded in 2012, and the volume of transactions also remained strong according to analysis from business and financial advisers Grant Thornton UK LLP.
Publicly recorded transactions in the sector totalled 95 deals, just shy of the 2011 total yet comfortably ahead of volumes seen in 2009 and 2010. Interestingly, the value of these transactions surpassed the previous year’s total four-fold, with the disclosed deal values for the top 10 facilities management transactions totalling more than £3.4bn in 2012.
The total value and volume of M&A in the sector was boosted by a flurry of higher value deals in the latter half of the year, with blockbusters such as private equity heavyweight Terra Firma’s £3bn acquisition of Annington Homes seeing the largest value transaction in recent years.
2012 also saw a sharp rise in the number of soft FM deals being recorded, forming almost half of all recorded deals. This compares with around one third of the annual total in 2011.
Despite the headline-grabbing Terra Firma deal, the year saw a drop in M&A activity by private equity investors, with only around half the number of PE deals compared to 2011 and only a third of those made in 2007. Faced with continued lending constraints, and a market in which trade buyers are enjoying healthy balance sheets, private equity activity is expected to remain limited in 2013.
Paul Stout, Associate Director of Corporate Finance at Grant Thornton in Southampton, commented: “The facilities management sector has entered 2013 on a strong foot. Last year saw significant improvements in the performance, and subsequent valuations of FM companies and from what we’ve seen thus far, this momentum is likely to carry on throughout the year, fuelled predominantly by trade activity.
“In particular, the soft FM companies could see increased M&A activity, as the larger outfits look to strengthen their offerings and the mid-sized companies look to diversify. Moreover, the larger, quoted companies will continue to train their scopes on markets further afield, as uncertainties across the eurozone persist and the domestic economy remains stagnant.”
