The commercial services sector continues to draw strong investor interest, driven by attractive fundamentals, according to a new industry report released by the Commercial Services investment banking team from Brown Gibbons Lang & Company (BGL). With the level of consolidation and increasing competition for platforms and add-ons in sectors such as fire & life safety and commercial HVAC over the last several years, investors are increasingly turning to sub-sectors such as security & access control and exterior building façade services, which remain in the early innings of platform investment and consolidation.
David Silver, BGL Director: “There’s an ongoing evolution in investment focus within the commercial services sector, with certain earlier-stage sub-sectors increasingly emerging as core investment theses for private equity firms. These earlier-stage sub-sectors present compelling opportunities to replicate the successes that private equity firms have seen in more established sub-sectors, such as fire & life safety and commercial HVAC.”
Eliott Musick, BGL Managing Director: “Most of our conversations with leading private equity and institutional capital investors in Commercial Services navigate to a ‘what’s up next?’ type of idea generation. The playbook is well established, and the universe of opportunities is well known in commercial HVAC and fire & life safety. As a result, we’re focused on being out in front of the next wave of consolidation opportunities in sub-sectors such as perimeter security, exterior building façade, and commercial water treatment.”
Inside the report, BGL examines the compelling attributes and fundamentals that have contributed to the strong interest and investment in the commercial services sector to date, and which sub-sectors present opportunities as the next waves of commercial services consolidation.
Key takeaways include:
- The key benefits of Commercial Services rollup strategies, including opportunities for building scale, driving efficiencies, enhancing margins, and ultimately driving EBITDA growth
- Why the security & access control and exterior building façade services sub-sectors are attracting increasing interest and investment from private equity
- Notable transactions that highlight the growing investment and platform formation within these sub-sectors, including from both larger and smaller funds, highlighting the increasing traction and participation among various types of investors
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