Major public equity indices increased in Q2 2023, up 8% quarter-over-quarter and up nearly 20% year-over-year. Strong economic data has reduced concerns of an imminent recession, driving current and future expectations for company earnings higher. Despite the overall market strength, there is trepidation among investors that the Fed will implement more rate hikes in the coming months to combat inflation.

Valuation multiples within the Professional Services subsectors covered by BGL have been mixed. Two of the three BGL Professional Services composite indices are underperforming the S&P 500 year-over-year, with the three indices averaging gains of 8%.

Volatile equity markets and credit availability have tempered M&A activity in the Professional Services sector. However, the ample supply of equity capital will continue to serve as a catalyst for M&A, with both corporate and private equity buyers competing for high-quality assets. Heading into the third quarter, market indicators suggest that sector transaction activity will continue to outperform the broader market.

BGL’s Quarterly Professional 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 Professional Services market and is always available to discuss appropriate M&A strategies and financing alternatives with its clients and prospects.

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