Facilities Management: Ripe for consolidation and private equity investment

Jake Bush | 26 April 2024

The Facilities Management sector contributes over £60bn annually to the UK economy and employs c.10% of the UK workforce, so it’s immediately clear to see the sector’s importance as well as its potential attractiveness from an investment perspective. This attraction is also apparent when looking at M&A deal activity – according to Grant Thornton’s figures, there were 168 deals in the sector in 2023, an increase of 2.5% on 2022 which was already a particularly strong year for sector deal flow. When considering these figures with the context of global M&A activity being considerably down in 2023, it becomes clear that FM is not only robust, but a rare story of growth & opportunity in the current climate.

With appetite for dealmaking in the FM sector being high, Jake Bush looks at whether the sector is ripe for consolidation and Private Equity (PE) investors.


Private Equity in the Facilities Management market 

We have already this demonstrated by deals such as CD&R’s acquisition of OCS & Atalian, H.I.G.’s formation of the Andwis Group, and IK Partners’ recent purchase of Checkmate Fire Solutions, to name a few. Facilities Management ticks a lot of boxes when it comes to criteria for being investment worthy – it generally has secure, reliable, long-term income with the added benefit of having a high percentage revenue generated from non-discretionary spend, giving it added resilience to macroeconomic factors. FM also has the advantage of having a great deal of value still yet to be unlocked through the integration of technology and innovation, which holds particular value in the PE landscape.

One of the key angles from which PE approaches the FM sector is consolidation. The industry remains highly fragmented and often the biggest barrier to growth for individual businesses is either limited coverage geographically, not having a wide enough breadth of services to offer their clients, or a combination of both. These issues can be tricky to tackle organically, leaving strategic M&A activity an appealing option to drive growth, and often the best way to facilitate these deals is through external investment. This situation plays well into the PE buy & build playbook so it’s no surprise that we are seeing deals of this type come to fruition. That said, there is still huge opportunity for more deals of this type to happen so it would be fair to suggest that PE investment levels into the sector will maintain, if not intensify in the near future.

FM Leadership  

So, what will this mean for leaders & leadership teams in FM businesses both pre & post investment? The PE landscape brings a niche set of challenges and expectations for leadership teams which vary depending on the position of the organisation and where it is on its timeline. Pre-deal there’s a desire for a leadership team with a unified appetite for growth, underlined by a necessity for competence and technical aptitude when it comes to addressing existing challenges within the business. Another key pre-deal theme is organisational structure, and whilst there’s some value for investors to unlock, in taking on a disorganised business, this does slow things down and can delay their returns. In the case of FM being mostly in the buy and build/consolidation category as opposed to turnaround, adding in a phase of complete re-organisation is not necessarily the most attractive route, so those businesses that are already well structured will be favoured.

Human Capital is an essential consideration both pre and post deal, so how do investors & leadership teams give themselves the best chance of success on this front? A key stage of the process is assessing the existing team, benchmarking, and accurately profiling individual leadership roles. Having the right people, in the right roles, at the right time should be top of the priority list for both sides. This should go much further than “that person has that much experience in that sector so therefore they are a perfect fit”. It needs to be an objective, in-depth analysis of personality, motivations, leadership capability, development potential etc, all matched back to the profile required to deliver strategic objectives. Naturally, this can lead to some discrepancies between individuals and role profiles, and whilst this could ultimately mean replacing or reshuffling existing leaders within a business, this is a difficult but often necessary step to ensuring future success.

From an individual leader’s point of view, the uncertainty around what their business and current role within it could look like post-deal can be a cause for concern, but leadership profiles under the backing of Private Equity do typically have some common themes, such as the need to have a growth mindset, comfortability in the unknown, a collaborative inclination and the ability to take ownership. So, from an individual leader’s perspective, the ability to harness some of these traits will be valuable in the context of a post-deal role.


In summary, it’s likely that we will continue to see increased investment in FM in the years to come and with that should come a willingness to evolve, transform and develop leadership teams. With the Private Equity industry sitting on a huge amount of dry powder after the turbulence of the last 18 months, it feels as though the FM industry is perfectly poised to benefit from the PE touch paper being lit in 2024.


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