BGL Business Services composite indices exhibited year-over-year declines but are outperforming the S&P 500 by an average of over 5%, providing higher degrees of stability to investors relative to the overall market.
- The median EBITDA multiple in the Human Resources Outsourcing subsector was 10.6x in Q2 2022, representing a 22.1% decrease from Q1 2022. This contraction was driven by broad economic factors, including inflationary conditions and rising interest rates, which are negatively affecting employment opportunities. Multiple contraction can also be attributed to the stagnation of the unemployment rate, which did not show any material decrease throughout the quarter.
- Within the Contact Center Services subsector, the median EBITDA multiple was 11.9x in Q2 2022, representing a 6.3% increase from Q1 2022. The increased adoption of cloud and AI-based contact center technology continues to drive operational efficiencies and profitability within the subsector.
- The median EBITDA multiple for the Fixed Asset Management subsector contracted modestly from 13.5x in Q1 2022 to 12.4x in Q2 2022. The downtick was driven by continued inflationary concerns as well as labor shortages, increased labor costs, and continued supply chain disruptions.
Despite declining equity markets, the Business Services sector remains attractive in the M&A market compared to other sectors. Ample capital availability has continued to serve as a catalyst for robust M&A activity, with both corporate and private equity buyers competing aggressively for high-quality assets. Moving into the third quarter, market indicators suggest that M&A activity in the Business Services sector will continue to outperfom other sectors.
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 current Business Services industry trends and discussing appropriate M&A strategies and financing alternatives.
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