Business Services Q3 2019

Q3 Business Services

M&A Transaction Trends

Largest Transactions Closed

  • Target
  • Buyer
  • Value($mm)

Source S&P Capital IQ as of 10/10/2019 and PCE Proprietary Data

M&A Industry Trends

Cashierless Stores on the Rise

After Amazon launched the first artificial intelligence (AI) enabled store back in 2018, International Data Corp published a recent study that shows approximately 28% of 400 retailers surveyed are testing or rolling out pilot cashierless systems. This trend has boosted profits for companies that create cashierless technologies, such as Standard Cognition Inc. and Vcognition Technologies Inc.1

Elevator Systems Getting a Lift From AI Technology

For years companies such as Schindler Group, Otis Elevator Co., or ThyssenKrupp AG have made their profits by designing and installing elevator systems in buildings. With the rise of the Internet of Things and AI, they can move into the services business as a yearly subscription-based elevator management and maintenance programs. Schindler Group monitors the 36 elevators in 10 Hudson Yards and can intervene at the slightest anomalies, which significantly reduces delays and elevator down-time for repairs.2

HP Hopes to Gloss Over Troubles With Job Cuts and Redesigns

HP has ambitious plans to restructure and cut costs. The program includes cutting jobs for 9,000 workers, 16% of their workforce which is expected to save roughly $1 billion once completed. In addition, HP will roll out two lines of inexpensive printers that only use HP’s printer cartridges and more expensive models that are compatible with a variety of cartridge producers.3

Drone Technology Set to Help Farmers Detect Pests, Cut Costs

Pollen Systems Corp., a data monitoring company, uses drones and high-resolution, infrared cameras to detect pests and help managers mitigate pest damage in vineyards. The technology cuts labor costs and time spent to identify unwelcome insects by up to 90%, according to the company. This will significantly help farmers increase gross profits by reducing crop growing and harvesting costs.4

Meeting-Space Companies in High Demand

Even with WeWork’s build-up to an IPO and then shelving it for a future date, meeting-space companies have become a high demand service for businesses. Etc.venues, a British real estate company, is planning to open 9-12 locations in New York City in the next few years as the number of conventions and meetings has risen 5% in the last five years. The uses of hotels and hotel planners for conferences fell from 62% in 2017 to only 47% in 2019. This marks a gradual shift from high-end hotels to independent and meeting space-focused companies.5

Largest M&A Transactions Closed

Target Buyer Value($mm)
WageWorks, Inc. HealthEquity, Inc. $2,375.00
Onecbi, LLC Stephens Capital Partners LLC $60.00
Stand-Alone US Large Market Health and Defined Benefit Administration Business of Mercer LLC Morneau Shepell Inc. $57.00
Auriemma Consulting Group, Inc. - $45.00
W Group INC. Wavestone SA $31.00
Dynamic Research, Inc. AB Dynamics Plc $25.00
Substantially All Assets of PE Facility Solutions, LLC Kellermeyer Bergensons Services, LLC $24.00
ONE11 ADVISORS Altus Group Limited $11.00
Certain Assets Related to the Operations of Branches of HireQuest, Inc. - $10.00
Pineapple Ventures, Inc. Pineapple Express, Inc. $5.00
Gold Medal Services, LLC Kinderhook Industries, LLC $5.00

Source S&P Capital IQ as of 10/10/2019 and PCE Proprietary Data

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Contacts

Woody Whitcomb

 

Woody Whitcomb

Investment Banking

 

407-621-2113

wwhitcomb@pcecompanies.com

Michael Poole

 

Michael Poole

Investment Banking | ESOP

 

407-621-2112

mpoole@pcecompanies.com


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. Murawski, John, “Cashierless Stores Make Inroads in the U.S.,” The Wall Street Journal, Aug. 12, 2019.
  2. Shah, Agam. “Going Up? The Elevator-as-a-Service Business,” The Wall Street Journal, Oct. 7, 2019.
  3. Gallagher, Dan, “HP Has No Easy Way Out of Printer Jam,” The Wal Street Journal, Oct. 4th, 2019.
  4. Geiver, Luke, “Vineyard management proves worth of drones in precision ag,” UAS Magazine, Sept. 11, 2019.
  5. Morris, Keiko. “Meeting-Space Companies See Big Money in Manhattan,” The Wall Street Journal. Oct. 3rd, 2019.
David Jasmund

 

David Jasmund

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Michael Rosendahl

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Will Stewart

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Woody Whitcomb

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Michael Poole

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