BGL Business Services Quarterly Update

Q1 2022

Major public equity indices continue to recover from a temporary decline in February and March to end Q1 2022 up over 14% year-over-year.  The public equities market experienced a temporary downturn in February and March of 2022 in response to rising inflationary pressure and ongoing geopolitical conflict in Eastern -Europe. 

Report Download

Managing Director

Business Services subsectors have remained resilient through broader market volatility exhibited in Q1 of 2022, showing signs of quarterly recovery and sustaining year-over-year expansion of EBITDA multiples.  Moreover, all three of BGL’s Business Services indices exhibited year-over-year growth, with Human Resources Outsourcing outperforming the S&P 500 by 6.0%.

  • The median EBITDA multiple in the Human Resources Outsourcing subsector contracted minimally from 13.8x in Q4 2021 to 13.6x in Q1 2022.  The downtick appears to be driven by margin compression resulting from labor market constraints and inflationary conditions.  Decreased multiple growth in the subsector compared to FY2021 is also likely due to stagnation of the employment rate, which is witnessing less dramatic increases, as many workers who were previously unemployed due to the COVID-19 pandemic gained employment in the end of 2020 and throughout 2021.

  • Within the Contact Center Services subsector, the median EBITDA multiple was 11.9x in Q1 2022, representing a 41.6% increase from Q4 2021.  The increased adoption of cloud-based call centers continues to drive growth of the subsector, with the technological advancement of call center hardware and software enabling increased operational efficiency and profitability.

  • The median EBITDA multiple for the Fixed Asset Management subsector contracted modestly from 15.0x in Q4 2021 to 13.5x in Q1 2022.  The downtick appears to be driven by inflationary conditions as well as labor shortages and increased labor costs.

Positive equity market performance and ample capital availability have continued to serve as catalysts for increased M&A activity in the Business Services sector, with both corporate and private equity buyers competing aggressively for high-quality assets. Market indicators suggest that the high level of M&A activity will continue into the rest of 2022.

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 appropriate M&A strategies and financing alternatives.

Please complete the form above to download your complimentary copy.

< View All Research