Major public equity indices increased in Q4 2023, up 12% quarter-over-quarter and up 24% year-over-year. Strong economic data has reduced concerns of an imminent recession, driving expectations for company earnings higher. Given the recent overall market strength, investors maintain a positive outlook heading into 2024, driven by cooling inflation and planned rate reductions from the Federal Reserve.
Valuation multiples within the Professional Services sector have remained strong. Two of the three BGL Professional Services composite indices have outperformed the S&P 500 quarter-over-quarter, with the three indices averaging gains of 17%.
Volatile equity markets and credit availability have tempered M&A activity in the overall market. 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 Q1 2024, market indicators suggest that transaction activity in the Professional Services sector 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.