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    Business Services Q2 2020

    Q2 2020 Business Services

    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

     

    Source S&P Capital IQ as of 7/20/2020 and PCE Proprietary Data

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    Data Assumptions

    This report represents transaction activity as mergers & acquisitions, consolidations, restructurings and spin-offs. Targets are defined as U.S. Based companies with either foreign or U.S. based buyers. Transaction information provided is based on closed dates only.

    Glossary

    EBIT - Earnings Before Interest and Taxes
    EBITDA - Earnings Before Interest, Taxes, Depreciation, Amortization
    LTM - Last Twelve Months
    TEV - Total Enterprise Value

    Sources:

    1. Isaac, Mike, et al. “Uber Buys Postmates for $2.65 Billion.” The New York Times, The New York Times, 6 July 2020.
    2. Kurth, Torsten, et al. “Signs of Rebound Forecast a New Era for Agriculture: BCG.” Https://Www.bcg.com, BCG, 14 May 2020.
    3. Patel, Kush. Accounting Services in the US, IBISWorld, June 2020.
    4. O'Connor, Claire. Waste Collection Services in the US, IBISWorld, June 2020.
    5. Zacks Equity Research. Staffing Industry Outlook Gloomy Amid Coronavirus Crisis, Nasdaq, 15 June 2020.
    6. Norton, Matt. “Weakening Pulse of Engineering Staffing Market.” Staffing Industry Analysts, SIA, 25 June 2020.
    7. "Online Job Ad Index Rises in June compared to May but Still Down Over Year."Staffing Industry Analysts, SIA, 15 July 2020.
    8. Mathews, Chris. “Waste Management Amends Multibillion-Dollar Acqusition Price, Finds Buyer for Assets.” Bizjournals.com, Houston Business Journal, 24 June 2020.

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