The Business Services sector has expanded rapidly over the past decade, driven by the continued trend toward outsourcing and offshoring, as well technological advances in information and communication technology. Broadly, the sector remains highly fragmented, as industry dynamics have led to the creation of a substantial number of market participants in an increasing number of disciplines.
The Business Services sector provides tremendous opportunity for value creation, both for strategic and financial investors. CFI has organized a group of experienced professionals with strong backgrounds, experience and relationships in the Business Services industry worldwide. Seamless co-operation allows the CFI group to optimize the value of any cross-border mid-market M&A transaction.
The CFI group segments the Business Services industry into nine primary sub-segments including: Business Process Outsourcing, Facility Management Services, HR Services, IT Services, Financial Services, Professional Services, Education & Training Services, Media & Entertainment and Telecom.
Business Process Management
For years on end, technology has continued to take the world by surprise, enabling an industrial revolution, economic change as well as social transformation. Information technology is no exception - its evolution, advancements and results continue to spread at a rapid pace, as does humanity’s dependence on technology in general. This probably explains the fact that despite global uncertainties, natural disasters and low consumer con?dence in 2011, global spending on technology continued unabated, and demand for global sourcing for IT-BPO services remains strong. Business Process Outsourcing (BPO) ornewly termed as Business Process Management (BPM) involves the transfer and management of various aspects of a company’s operations, spanning a broad continuum including receivables/payables processing, document outsourcing, supply chain management, customer service outsourcing and several others. Industries such as Banking, Financial Services, Insurance, Telecom, Healthcare, Media and Utilities are major users of BPM services.
BPM-vendors with offshore delivery capabilities and robust technology platforms stand to benefit from structural growth opportunities in the BPM industry. The CFI group recognizes the opportunities present in the market both from a client and supplier perspective, and is well-positioned to optimally leverage its global reach and sector knowledge to deliver the highest value to its clients.
Facility Management Services
Facility Management Services (FMS) is a growing sub-segment of the Business Services market within which continued consolidation is expected. The FMS market isexperiencing growth owing to the number of companies requiring such services (businesses, health services, education, etc.) and making increasing use of outsourcing. The on-going need for facility owners to control fixed costs, the continued prominence of environmentally-friendly green initiatives, and the increasing focus on facility security and worker safety makes FMS one of the most dynamic industries within the Business Services sector.
Facing saturation in mass market contract services, many FMS business seek broader business applications to be able to provide more added value. The CFI group has deep industry knowledge and extensive experience providing M&A advisory services for companies across the FMS continuum, including those providing property management, restoration, janitorial, landscaping, security, pest control, catering and general facility services across the globe.
The HR Services sector includes outsourced employee-related services such as staffing and recruitment, as well as transaction processing services such as payroll and benefits administration. HR Services are predominately featured when end markets move at rates faster or slower than the recruitment/on boarding process as well as during peaks and troughs of an economic cycle. This phenomenon is most pronounced for white collar staffing agencies as their higher exposure to perm leads to significant operational gearing.
Confidence is a crucial factor for staffing agencies. Worried candidates don’t move jobs. Uncertain companies don’t hire. The CFI group is deeply rooted in the HR services sector, and its global footprint provides clear insights on momentum in regional temp labour markets suggesting slowdowns or improvements. The CFI group has unparalleled experience in providing tailored M&A advisory solutions to a vast network of staffing companies, permanent recruitment companies and HR-outsourcing companies worldwide.
Enterprises tend to invest in information technology (IT) as a productivity amplifier. This means that in times of economic turmoil these investments will be pulled back to a level consistent with “keeping the lights on” and, conversely, they will be increased during periods of recovery. Historically, IT departments, and by extension IT budgets, lacked the agility to react quickly to the economic realities. However, behavior is changing helped by the adoption of more flexible and cost efficient delivery models, ranging from offshoring to cloud computing, and by vendors offering better and more powerful technologies.
The CFI group has advised on numerous IT Services transactions and possesses true industry expertise, understanding business and delivery models, KPIs, global and local market macro and micro trends, as well as valuation and transaction dynamics.
The global financial services industry is an exceptionally dynamic sector in today’s marketplace. It is expanding in terms of clients and services offered, and is undergoing continuous structural changes driven by a multitude of forces such as demographics, product innovation, and technology, and also impacted by regulation, economic policy and the overall political environment.
The CFI Group has advised a multitude of clients in the financial services sector in M&A transactions as well as strategic alliances, debt restructurings, IPOs and partnerships. CFI’s wide-ranging network includes wealth and asset management companies, insurance and brokerage firms, as well as other financial institutions. In terms of geographies, The CFI Group is specialized in advising transactions in each of its key regions granting direct access to each market, boosting cross border transactions.
The operations of corporations and the regulatory climate have become more complicated in the past decade, leading more corporations to seek external expert advice. M&A dynamics over the years have resulted in the formation of multi-service firms that bundle services to offer "one-stop shopping". Small and mid-sized firms can compete successfully with large firms in their niche if they offer special expertise.
The CFI Group plays a prominent role in this continued sector consolidation and has advised on transactions that include accounting, advertising and marketing, architectural, consulting, engineering, legal and scientific research services companies.
Education & Training Services
The global education industry is witnessing strong growth momentum with fast emerging and developing nations. Education and training services companies have realized an uptick in activity driven by the elevated unemployment figures in many mature markets. The industry remains highly fragmented and unorganized with firms expanding into new geographies and new training segments by acquiring existing businesses. Education and training services include job-specific certification, professional training, vocational education, classes emphasizing self-fulfillment, formal government education, leisure and hobbies.
Demand for infrastructure development in the education industry is becoming a necessity with increasing demand for quality schooling. Enrolment in Pre-primary education recorded a steady increase between 1995 and 2011 for both girls and boys all over the world.
Media & Entertainment
The media and entertainment sector has experienced double-digit growth in the past decade, driven primarily by the rapid rise of digital technologies. The media industry is undergoing a fundamental shift from traditional print media to digital technologies and platforms. Media enterprises have adapted their M&A strategies to match these new developments.
The CFI Group members are active in providing transaction advisory services to new media companies and are acutely aware of the trends and value drivers that determine success in today’s M&A market.
Leading edge technology and telecom solutions are attractive to various telecommunication manufacturers, technology developers, service providers, and operators. Deregulation in developed economies opened the market to competition, significantly impacting industry concentration and sector trends and developments. The growth of the telecom sector has been guided by increased prevalence of cellular services, short messaging services, internet, data and broadband services. There has also been a trend in recent years for telecoms companies to transition into other areas such as managed IT services to exploit cross-selling opportunities to customers.
The CFI group has advised on a number of transactions in the telecoms and related sectors and its members are acutely aware of the macro trends and key drivers that create value and determine success in today’s M&A market.