Support Services

From logistics to consulting – we have a wide range of specialists across this broad sector

How much are companies worth in the Support Services sector?

The following 3 graphs will give private business owners a broad indication of the value of their business:

1. The Enterprise Value to EBITDA* multiples on which comparable listed companies are trading

Support Services graph 1 reversed

 

At the end of H1 2019, the global, all market average Enterprise Value to EBITDA* multiple for listed support services companies was 13.6x. This was greater than the previous six months and up on the previous year, when listed support services companies were trading on a multiple of 13.0x. Within the support services sector, trading multiples varied between 12.5x and 17.6x across the range of sub-sectors. Smaller businesses generally traded on lower multiples.

* EBITDA is Earnings Before Interest, Tax, Depreciation and Amortisation
† Note, the Enterprise Value to EBITDA multiples above are for listed businesses, and it is generally the case that privately owned businesses are valued at a discount. Listed company data was accurate at 01/07/19

2. The multiple of EBITDA paid by acquirers of comparable businesses

Support Services graph 2 reversed v2

 

The average multiple of EBITDA paid globally in support services transactions has fluctuated somewhat over the past few years. It currently stands at 13.1x. When reviewing these multiples we break out  businesses in the range $5-150m, as they tend to have unique attributes which affect their valuation. Smaller businesses have generally been sold on lower multiples.


The volume of M&A transactions and acquisitions

Support services graph 3 reversed

 

In H1 2019, there were 2,930 transactions globally in the support services sector. This is down on the preceding 6 months, when there were 3,195 transactions. Although volumes have slightly dropped, the high number in the last 6 months suggests demand for support services businesses remains buoyant.

 

For further information as to how these valuations and statistics are computed, and their impact on your transaction, please contact us.

Key support services market themes:

1

The success of Chat bots

AI and virtual agents are growing in the support sector space. This comes after success in the consumer sphere with chat bots somewhat removing the reliance on customer service departments, providing clear outcome measurement and recording consumer data more efficiently.

2

Augmented reality is becoming real

Augmented reality presents the possibility of solving a range of business problems. Several bars and others in the hospitality sector are seeking to implement this technology to aid with age ID verification, queue management, and service efficiency. Virtual reality may also be used in solving business problems remotely, or providing assistance in everyday office management.

3

Intelligent devices to collect data

Intelligent devices and supporting software have seen growth as the demand for virtual office assistants, data collection services and predictive analytics has boomed. With data having exceeded oil in value back in 2017, in the coming period, it is expected that there will be an industry push for standardisation of data format and collection platform technology.

4

Consultants becoming more relied upon

Firms are increasing their reliance on consultants to provide a roadmap for the alignment of fast-changing, cutting edge technology with business strategy and operations. This comes as vast B2B SAAS growth has led to the requirement of businesses to innovate as well as operate.

5

Consumers expect social media support

Consumers are expecting firms to provide more support via social media. A survey by ValueWalk shows that 63% of customers expect social media support from businesses and 35% prefer it to other channels. This is likely to increase as businesses seek to engage more and more with their customers.

6

Facility management becoming more integrated

Facility management is changing as businesses are seeking a more integrated solution to achieve lower costs. Technological integration is also growing with security AI, smart buildings and the provision of workspaces that prioritise staff wellbeing and mental health.

Please note data sources compiled by Corbett Keeling