25 July 2017 | Herpreet Kaur Grewal
The UK building and facilities services sector has grown by £15 billion since 2011, with a total UK market value of £125 billion in 2016.
An analysis by Livingstone, an international mid-market merger and acquisition (M&A) and debt advisory firm, also shows a resurgence in M&A over the past five years, with a 96 per cent increase in overall deal activity occurring since 2012, from 26 transactions to 51 in 2016, and over 20 deals already made so far this year - nearly as many as were made in the entire of 2012.
These results point to a degree of resilience within the M&A market despite the political and economic uncertainty associated with geopolitical changes such as Brexit.
Furthermore, the research points to renewed foreign interest in UK assets associated with the building and facilities services sector that has been incentivised by a stable economy and weak pound.
Examples of such transactions include Land Engineering by Idverde this month, Westway by ABM, and Trios group by SPIE.
Hard facilities services, such as maintenance, refurbishment and mechanical services, have made up most (59 per cent) of M&A activity over the past five years, with mechanical and electrical (M&E) being the most popular sub-sector - accounting for 29 per cent of deal volume over the period.
There has been a large spike in M&E transactions in the past two years especially, with 43 deals being made in 2015-16 compared with only 23 between 2012 and 14.
Jeremy Furniss, partner at Livingstone, said: "The M&A markets have demonstrated great resilience in the face of daunting levels of uncertainty driven by the slew of geopolitical developments, not least of which is the growing reality of the UK operating outside of the EU.
"In many ways, this should not surprise us. The UK has always enjoyed a head start in developing innovative solutions that the rest of the world has increasingly shown interest in accessing through acquisition. However, as the pressure to address escalating employment costs and regulatory scrutiny grow, the UK's talent for innovation and creativity will have to rise with it.
"For the time being, though, the UK's place as a facilities and services market of strategic interest to the rest of the world is likely to sustain deal activity well into the foreseeable future,"