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This month’s issue of the monthly executive brief providing M&A market insight for C-level management and their professional advisors.
Three industry categories accounted for the majority of middle-market M&A transactions in 2013. GF Data found that manufacturing, business services and distribution lead all sectors in total deal volume. Of those, business services showed the greatest improvement year to year. This trend may be indicative of a general improvement in the economy and, if 2014 lives up to expectations, business services may continue to represent one of the hottest middle-market M&A sectors.
Companies in this sector provide support services to businesses, such as office administration, hiring and placement of personnel, security services, cleaning, and waste disposal. According to First Research, the Canadian business services sector consists of about 100,000 companies with combined annual sales of more than $40 billion. As long as this trend is confirmed, the sector will be ripe for growth.
The business services sector is highly fragmented. Large companies often enjoy economies of scale and can compete for large accounts while small companies compete by offering highly specialized services or through superior customer service. These smaller size companies often sit right in the sweet spot of the middle market.
Since the year 2000, business services has consistently represented 15–20% of Corporate Finance Associates completed transactions. The demand for this type of business ultimately depends on the performance of the overall economy and so far all signs point to a healthy 2014.
For more information contact:
Douglas Nix, CPA, CA | Vice Chairman CFA
905 845 4340 ext. 211