September 16, 2002—UK corporate finance house Tenon Livingstone Guarantee (TLG) has forecasted continuing consolidation in the UK FM market, a slowing of the growth rate and further private equity investment.
TLG’s market review highlights the catering and cleaning sectors as especially likely to see consolidation. Compass and Sodexho dominate the 8.5bn UK catering market, together with Aramark and Elior. The rest of the industry is made up of companies with turnover of less than 50m, the majority very small with a limited number of contracts.
The 6.1bn cleaning sector is equally fragmented, dominated by a small number of large national and international companies and a high number of small, regional companies.
In 2000 there were 7,800 registered companies in the UK cleaning industry, 80% with turnover of less than 250,000.
TLG has analyzed merger and acquisition activity in the FM market for 2000 and 2001. During this period there were 68 trade acquisitions of UK FM companies, with a total disclosed deal value of 382.7m (excluding the 5.5bn merger of Granada and Compass in 2000).
The size of these deals was relatively small with an average disclosed value of 10.6m and over three-quarters valued at under 10m such as MacLellan’s 6m acquisition of Ramoneur.
Almost three-quarters of the deals involved UK acquirers. Of the 18 acquisitions made by overseas purchasers, 15 were made by European acquirers particularly French, Danish and Dutch companies.
TLG says this year will see further M&A activity for owner managers, corporate and private equity investees and investors, as companies seek to expand their service offering towards the ‘total facilities management’ model.
For more information, as well as copies of the market review, contact TLG.
—Richard Byatt
Reprinted with permission; copyright 2002 i-FM
