Business Services Q2 2020

Q2 2020 Business Services

M&A Transaction Trends

Industry Trends

Food Delivery Industry Delivering Heated Competition

Competition in the delivery space continues to heighten amidst the Coronavirus pandemic. Uber recently announced its all-stock acquisition of Postmates for $2.65 billion. This news comes after a rumored Grubhub deal fell through, after it was announced that Netherlands' Just Eat Takeaway acquared the Company for $7.3 billion. Following the acquisition, Uber will claim 37% of the food delivery market, still lagging to DoorDash, who maintains a 44% market share.¹

Competition Set to Increase as Agriculture Industry Forecasts Rebound

Following years of volatility, the agriculture industry appears to be setting pace for a rebound. Commodity prices have stabilized, farmers are appearing to boost investment, and sustainable local agriculture and food security needs are encouraging future growth. Industry participants can further support these trends and benefit from the rebound by developing innovative input products, digital tools that support farmers, and making strategic acquisitions to widen portfolios..²

Diversifying Services Leads to Promising Growth Prospects

Over the past 5 years, diversification of service offerings by the largest industry players achieved through M&A has begun to materialize. Through these acquisitions, a platform for advisory services has been created with management consulting and IT advisory work materializing. During the next 5 years, the largest industry players will continue to pursue M&A in an effort to increase market share. Future revenue growth in the industy will be driven by the continuation of add-on serivces in new, niche fields.³

Recycling Industry Primed for Increased Demand

Recycling operations have received renewed attention by Government legislators, and coupled with the continuting advancements of technological innovation in the space, the industry has experienced improved profitability in recent years. Driving industry growth will be continued household and business focus on waste reduction and diversion. California, New York and Washington have all implemented initiatives targeted at waste reduction. As more states adopt these measures, companies in the recycling space will be poised for increased demand.⁴

Professional Staffing Companies Experience Sluggish Demand

The Conference Board-Burning Glass Help Wanted OnLine Index remains down approximately 13% on a year-over-year basis. The index highlights a reduced demand on job postings on traditional job boards, corporate boards, social media sites and smaller job sites that serve niche markets. Staffing Industry Analysts ("SIA") published a May 2020 Pulse Survey Report supporting this sentiment which indicated an 18% year-over-year decline in corporate revenues. Coronavirus-led lockdowns continue to result in unproductive units in the industry, prompting job cuts in industries where staff is no longer able to report to a job site. Helping offset these troubles, there is an increase in back-office businesses such as shared services, fintech, healthcare and e-commerce businesses requesting increased personnel.^{5 6 7}

Waste Management Inc. Amends Terms for Multibillion-Dollar Acquisition

Waste Management Inc. (NYSE: WM) announced amended terms to its deal to acquire Advanced Disposal Services (NYSE: ADSW), on June 24th. The new terms outline that WM will acquire all outstanding ADSW shares for $30.30 per share and $1.8 billion in debt, implying an enterprise value of $4.6 billion. The new acquisition terms represent a $300 million decrease in valuation of ADSW compared to the original terms of the deal announced in April of 2019. The $4.6 billion acquisition is expected to be finalized by the third quarter of 2020.⁸

Largest Transactions Closed

Target
Buyer
Value($mm)

Duff & Phelps Corporation
Stone Point Capital LLC; Further Global Capital Management, L.P.
$4,200.00
Associated Benefits and Risk Consulting, LLC
USI Insurance Services, LLC
$266.00
Center for Toxicology and Environmental Health, LLC
Montrose Planning & Permitting, LLC
$200.00
Nomura Greentech
Nomura Holdings, Inc.
$113.00
Entangled Solutions, LLC
Guild Education, Inc.
$80.00
Substantially all assets of ClearAg and Substantially all assets of ClearPath Weather of Iteris, Inc
Telvent DTN, LLC
$12.00
Benefits Administration, LLC
Harbour Benefit Holdings, Inc.
$8.00
TeamGlobal, Inc.
Undisclosed
$4.00
AOC Key Solutions, Inc.
PurpleReign, LLC
$4.00
RCM Technologies, Inc.
Undisclosed
$1.00