Major public equity indices rose to record highs during Q1 2021 supported by prevailing themes of economic stimulus and widespread deployment of the COVID-19 vaccine.

The Business Services sector continued to see gains slightly above the broader market, with the Contact Center Services and Human Resources Outsourcing subsectors outperforming the S&P 500 by 6.1% and 1.9%, respectively, in Q1 2021.

  • The median EBITDA multiple in the Human Resources Outsourcing subsector increased to 14.6x in Q1 2021, more than double the Q1 2020 multiple of 7.2x. Primary contributors to this multiple expansion included a better-than-expected March jobs report (with the unemployment rate decreasing to 6.0%) and significant employment gains in areas that were more negatively impacted by COVID-19 (e.g., leisure, hospitality, and construction).
  • Within the Contact Center Services subsector, the median EBITDA multiple increased to 9.8x in Q1 2021, representing a 19.1% increase from Q1 2020. The shift to the work-from-home model has enabled many contact center businesses to pivot effectively during the pandemic, with those serving industries such as Financial Services, eCommerce, and Healthcare benefiting at an even higher overall rate.
  • The median EBITDA multiple for the Fixed Asset Management subsector of 14.7x remains at a historical high and is 55.8% above the Q1 2020 level. The essential nature of services, in addition to the increased importance of cleanliness, security, and recurring maintenance are underpinnings for continued strong performance in this subsector.

Positive equity market performance and ample capital availability have continued to serve as catalysts for increased sector M&A activity, with both corporate and private equity buyers competing aggressively for high-quality assets. Heading into Q2 2021, market indicators suggest that the high level of M&A activity will continue.

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 M&A strategies and financing alternatives.