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    Business Services Q3 2020

    Q3-2020-Business-Services

    Industry Trends

    Agribusiness Transitioning from Pandemic Response to Strategic Planning

    The Covid-19 pandemic led to accelerating changes in consumer trends, which has forced agribusiness firms to assess their strategic visions to ensure they can remain agile and drive growth during uncertain economic times. M&A is a strategic option firms are choosing as a way to secure supply chains, protect against future disruption, or acquire new technology and automation. As the economy continues to recover and businesses re-open, agribusiness firms will need to prepare to pursue bold changes to their portfolio review process to ensure they can take advantage of changing new market dynamics.1

    Waste Services Spread Thin

    Across the country, U.S. disposal workers have shouldered the burden of increasing residential collection, as businesses and schools remain impacted by the coronavirus pandemic. Several large U.S. cities have experienced labor shortages due to the current environment driving slowdowns in trash collections. The 2019 Bureau of Labor Statistics analysis on fatality rates highlights Waste Collectors as the fifth most dangerous job in the country. In May, the Solid Waste Association of North America estimated that 1,000 sanitation workers nationwide had fallen ill with the Coronavirus. With increasing trash tonnage and decreasing labor, industry constituents and legislators are advocating for protections for sanitation workers, including increased pay and government support, to help remedy a growing collection burden.2

    AI Revamping HR

    Recruiter.com announced the launch of its artificial intelligence-powered candidate sourcing technology. Recruiter.com has a network of over 26,000 recruiters, and they can now tap into the AI platform to find the ideally suited candidates for a particular job. Recruiter.com is not the only company relying on AI to enhance the efficiency and success of recruitment efforts. AI has developed beyond its dream vision into a growing reality of HR applications. AI is now a practical reality taking over routine management tasks to augment roles and tasks to prepare HR personnel to make more informed, better decisions about future candidates.3 4

    Changing Office Dynamics

    Office furniture manufacturers have been impacted by low demand for new office furniture and office remodels arising from the global pandemic. As the economy begins to recover, the market is expected to grow to an annualized revenue growth rate of 2.8% through 2025; performance likely diverges between basic stock furniture production continuing to struggle and customized, service-oriented products experiencing growth with offices customizing spaces to adapt to the current pandemic.5

    Auditing the Pandemic

    The Coronavirus has increased challenges posed to auditors as firms are tied mostly to remote communication. Access to data, particularly inventory and projections, has been minimized to contain the virus's spread, with auditors, at worst, relying on camera recordings of warehouses to count inventory. To ensure quality audits are being performed, the Public Company Accounting Oversight Board is extending its inspection window, covering five quarters instead of four. Inspections will be focused on how auditors are planning and responding to Covid-19-related risks. The report is expected to become available in the first half of 2021, with industry insiders pushing for the information to be released more expeditiously to maximize the report's utility for FYE audits.6 7

    Largest Transactions Closed

    • Target
    • Buyer
    • Value($mm)
    • Reliable Analysis, Inc.
    • Applus Services, S.A.
    • $79.00
    • Single Stream Recyclers LLC
    • Balcones Resources, Inc.
    • $41.00
    • Irving Burton Associates, Inc.
    • DLH Holdings Corp.
    • $32.00
    • Substantially All Assets of firstPRO, Inc.
    • Undisclosed
    • $3.00

     

    Source S&P Capital IQ as of 10/9/2020 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. Dongoski, Rob. “Agribusiness Fuels Growth with Strategic M&A, Regular Portfolio Reviews.” EY, EY, 11 Aug. 2020.
    2. Jr., Gerald Porter, and Sarah Holder. “For Cities, 2020 Really Is a Garbage Year.” Bloomberg.com, Bloomberg, 29 Sept. 2020.
    3. Chamberlain, Andrew. “Glassdoor's Job & Hiring Trends for 2020.” Glassdoor, Nov. 2019.
    4. Recruiter.com Group, Inc. “Recruiter.com Announces New Artificial Intelligence Platform.” GlobeNewswire News Room, "GlobeNewswire", 22 Sept. 2020.
    5. Rodriguez, Arnez. “Office Furniture Manufacturing Industry in the US - Market Research Report.” IBISWorld, Aug. 2020.
    6. Maurer, Mark. “Auditors Struggle to Access Data, Count Inventory During Remote Work.” The Wall Street Journal, Dow Jones & Company, 1 Sept. 2020.
    7. Maurer, Mark. “U.S. Audit Watchdog Overhauls Inspection Plan to Assess Virus Impact.” The Wall Street Journal, Dow Jones & Company, 12 Aug. 2020.

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