A Note to our Readers:

We are currently experiencing an unprecedented period for the U.S. and global economy. Volatility in the public equity markets has resulted in a significant sell-off across all industries, including the Business Services sectors we follow.

Valuation multiples in the broad Business Services industry declined by 27 percent in Q1 2020 compared to Q4 2019, and by 20 percent over Q1 2019. Certain subsectors were less susceptible to valuation deterioration than others:

  • Companies that provide Fixed Asset Management services (e.g., janitorial, cleaning, maintenance) have demonstrated resilience with a modest 5 percent contraction in multiples since Q1 2019, illustrating strong investor demand for essential services.
  • In contrast, the Human Resources Outsourcing sector has not fared as well. In a recessionary period, companies tend to shed employees fairly rapidly. As a result, there is reduced demand for human resource-related services such as payroll processing, benefits administration, background checking, and temporary staffing. Given where we are in the current economic cycle, it is no surprise to see the sector down 41 percent from the previous quarter and down 37 percent from a year ago.

BGL’s Business Services Group covers a broad spectrum of sectors, with a particular focus on facility maintenance, marketing/call center, and human resources. For more than 30 years, but especially in today’s rapidly-changing market, BGL has been dedicated to working closely with our clients to develop strategies and tactical steps that help achieve both short- and long-term shareholder goals.