Downturn in 2014 FM M&A activity


The opening quarter of 2014 has seen a continued drop in the volume of merger and acquisitions activity in the Facilities Management market.

The latest figures released by business advisers Grant Thornton, reported that the number of deals in the sector have dropped from 19 to 16, compared with the previous quarter. 

This is the sixth quarterly fall in activity in a row, and represents the lowest first quarter figures since the company started measuring in 2007.

Deals involving soft Facilities Management providers continue to be the most prominent, with the majority of the quarter’s M&A deals coming in soft FM sectors such as catering, cleaning and security. Grant Thornton reported a paltry three hard FM deals in the Q1 period.

However, in spite of the relatively low Mergers and Acquisition activity, FM companies tracked by Grant Thornton still "continue to perform well versus the rest of the market".

The company highlights that whilst 'average' growth across the sector stands at approximately 4 per cent, down on Q4 2013 (6.6 per cent) it remains “well ahead” of its FTSE All Share and Support Services indices, which stood at -1.5 per cent and 1.8 per cent respectively.

Looking forward, the company predicted a continued trend in reduced M&A activity as a result of "the limited pool of potential acquirers", international buyers put off by unfavourable exchange rates and private equity buyers remaining reluctant to spend in the sector, after a number of difficult deals.

The report concludes, "it is likely that the market over the coming months will be characterised by FM businesses actively pursuing opportunities in related, but adjacent sectors."

"We have already seen moves by some into areas such as healthcare and education and there are also strong indications that large FM players may be looking increasingly at the recruitment and staffing sectors – especially in markets where the end client is the same as their core FM spaces."