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    Business Services Q4 2022

    Q4 2022 Business Services

    Industry Trends

    Private Equity Firms Turn to Waste and Recycling Companies

    M&A activity in the waste and recycling industry has increased over the past couple of years, with 2022 posting strong results. While the industry’s top publicly traded companies have been highly acquisitive this year, they are experiencing increased competition from private equity firms and infrastructure funds competing for deals. Private equity firms have increasingly sought reliable environmental services in their portfolio, expanding the definition of infrastructure to include fleets or even customer contracts.1

    Unemployment Rates for Professional and Business Services Sector Rising

    Recent layoffs in the professional and business services sector raised the unemployment rate in Q4, according to data from the U.S. Bureau of Labor Statistics. In October and November, the unemployment rate increased to 3.5% and 3.7%, respectively, a significant jump from 2.9% in September. The increase in unemployment comes as companies reduce part of their workforce amid tightening margins, driven by a cooling economy and the Federal Reserve's continued rate hikes.2

    Growing Backlogs for Landscaping Companies

    While sales for new projects are on the rise, fast-growing inflation, fluctuating material costs, and supply chain bottlenecks are causing landscaping companies to experience growing backlogs. According to a survey by Lawn and Landscape, 43% of companies posted backlogs of more than six weeks for construction projects. Over the past months, landscaping companies have witnessed an uptick in project size, scope, and budget, as companies bid projects higher to offer competitive prices.3

    BP Completes $4.1 Billion Acquisition of Archaea Energy

    BP completed its $4.1 billion acquisition of Archaea Energy, a major developer of renewable natural gas projects at waste sites. The acquisition marks a milestone in the company’s strategic bioenergy business with the addition of Archaea’s 50 RNG and landfill gas-to-energy projects in the U.S. An additional 80 projects are in development. Republic, which shares a $1.1 billion joint venture with Archaea, waived their “change in control rights,” which would be triggered by the transaction's closing.4 5

    Largest Transactions Closed

    • Target
    • Buyer
    • Value($mm)
    • Nielsen Holdings plc
    • Brookfield Business Partners L.P.; Evergreen Coast Capital Corp.
    • $16,142.60
    • PSG Global Solutions, LLC
    • Teleperformance SE
    • $300.00
    • Hill International, Inc.
    • Global Infrastructure Solutions Inc.
    • $287.82
    • Kessler Financial Services, L.P.
    • Stone Point Capital LLC
    • $210.00
    • Equus Workforce Solutions
    • APM Human Services International Limited
    • $153.50
    • St. Charles Consulting Group, LLC
    • NIIT (USA), Inc.
    • $23.43

    Other Financial Buyer Transactions Closed

    • Target
    • Buyer
    • Value($mm)
    • Quorum Hotels & Resorts, Ltd.
    • Somera Capital Management, LLC
    • n/a
    • Ethisphere LLC
    • Alpine Management Services III, LLC
    • n/a
    • Terry, Lockridge & Dunn, Inc./World Trend Financial Planning Services, Ltd.
    • Savant Capital, LLC
    • n/a

    Other Strategic Buyer Transactions Closed

    • Target
    • Buyer
    • Value($mm)
    • Csuite Financial Partners LLC
    • Kingsway Financial Services Inc. 
    • $8.50
    • Intellectual Property Management Company, Inc.
    • CentralNic Group Plc
    • $7.60
    • Wipro Opus Risk Solutions LLC
    • Loaninghub, Inc.
    • $0.64
    • Management Partners Inc.
    • Baker Tilly US, LLP
    • n/a
    • Public Sector Advisory Practice of Grant Thornton
    • Guidehouse LLP
    • n/a

     

    Source S&P Capital IQ as of 1/9/2023 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. Rosengren, Cole. "Waste and recycling M&A is as active as ever. What's driving sellers to exit the industry." Waste Dive, 7 December 2022.
    2. "Professional and Business Services." U.S. Bureau of Labor Statistics, 29 December 2022.
    3. “Landscaping Services.” Dun & Bradstreet FirstResearch, 17 October, 2022.
    4. "bp completes acquisition of Archaea Energy" bp, 28 December 2022.
    5. Rosengren, Cole. "Archaea shareholders approve $4.1B sale to BP." Waste Dive, 14 December 2022.

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