The growing demand for office reconfigurations and managing rising energy expenses are driving the growth of the FM category

Facilities Management Services Category - Procurement Intelligence

The global facilities management (FM) services category is expected to grow at a CAGR of 12% from 2023 to 2030. Hard facilities management customers are switching from labor-intensive to technologically sophisticated options, especially for security and fire. Managing growing energy expenses and achieving non-negotiable ESG targets and the decarbonization strategy are the major factors that make energy management solutions an increasingly sought-after investment topic in 2023.

According to Grant Thornton’s 2022 report, in the hard FM service sector, given the evolving nature of the workplace, the demand for office reconfigurations has increased steadily. In 2022, there were 14 deals for fabric maintenance, fit-out, and refurbishments compared to four deals witnessed in 2021. Similarly, HVAC facilities management deals in 2022 reached 12 compared to six in 2021.

On the other hand, based on FM M&A deals by type of acquirer, the percentage of deals completed by trade buyers amounted to 55% in 2022. This is a 6% increase from 2021. This indicated that private equity players are taking a cautious approach amid rising debt costs and trade buyers have realized that more consolidation can lead to economies of scale while maintaining the margins.

Grant Thornton’s FM 2023 report indicates that in H1 2023, transaction deals in the UK reached a total of 87. The deal volumes have continued their upward trajectory since 2019. It was also found that during the first half of the year, 47% of the facilities management deals in the region were funded by private equity. Hard FM deals continued to dominate the category in H1 2023. Cleaning services in soft facilities are expanding as a result of the ongoing focus on hygiene following the pandemic. In H1 2023, soft facilities management deals in the cleaning services segment increased to 23% compared to 15% in H1 2022.

A few instances of some of the notable deals in the FM sector were:

• In July 2023, Cap10 Partners LLP announced the acquisition of Sureserve Group plc. The deal was valued at USD 260 million. The latter specializes in providing compliance and energy services. Through Cap10’s support, Sureserve aims to achieve the UK’s Net Zero targets of many public sector bodies and social housing.

• In May 2023, Freshstream Investment Partners Limited announced the acquisition of MCR Group. The latter is an Irish provider of outsourced solutions such as security, personnel, engineering, and cleaning services. The deal aims to expand MCR’s operations further across Ireland.

• In March 2023, Carbon Architecture was acquired by Bellrock Property & Facilities Management. This was Bellrock’s first venture in the decarbonization sector. The deal would enable Carbon Architecture to form a new division while expanding its analytics and software solutions to Bellrock’s 900+ clients. The solutions will help customers achieve their net-zero targets.

• In March 2023, HIG Capital through its affiliates purchased Synecore and Meesons Future Limited. The Andwis Group will be formed by Meesons, Synecore, Classic Lifts and CPS. The last two are H.I.G.'s portfolio companies. With the help of this deal, they aim to form a combined integrated technical services provider serving all HVAC sub-segments across commercial, leisure, retail, and hospitality industries.

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Facilities Management Services Sourcing Intelligence Highlights

• The global facilities management services industry is highly fragmented. Compared to hard FM services, the soft FM services market is more consolidated. However, the number of transaction deals occurring in the hard facilities management services sector has been on the rise following the pandemic.

• The four major cost inputs in this category are labor, materials and supplies, energy, and taxes and government policies.

• The bargaining power of the global suppliers is moderate due to increased fragmentation. However, compared to general service providers, integrated facilities management suppliers command a higher bargaining power owing to the provision of specialized services and a higher global reach.

• In this category, Germany is the most mature and the largest market in Europe.Innovations like personalized workspace concepts and active space management are what distinguish these markets in particular. Higher ESG standards and increased operation and maintenance costs force companies to make larger investments in their structures.

Facilities Management Services Procurement Intelligence Report Coverage

Grand View Research will cover the following aspects in the report:

• Category Intelligence along with emerging technology and regulatory landscape

• Market estimates and forecasts from 2022 to 2030

• Growth opportunities, trends, and driver analysis

• Supply chain analysis, supplier analysis with supplier ranking and positioning matrix, supplier’s recent developments

• Porter’s 5 forces

• Pricing and cost analysis, price trends, commodity price forecasting, cost structures, pricing model analysis, supply and demand analysis

• Engagement and operating models, KPI, and SLA elements

• LCC/BCC analysis and negotiation strategies

• Peer benchmarking and product analysis

• Market report in PDF, Excel, PPT, and online dashboard versions

Cost Intelligence Highlights:

Grand View Research has identified the following total cost of ownership (TCO) for the facilities management services category:

• Reactive Maintenance

• Energy

• Capital Projects

• Technology and Oversight

• Preventive and Recurring Maintenance

We have found in our research, that the main cost elements in the TCO can be further broken down and simplified as below:

• Labor

• Materials and Supplies

• Energy

• Taxes and Government Policies

• Purchase, Installation, and Delivery

• Training

• Maintenances

• Water

• Health and Safety

• Disposal

• Others

Labor, materials and supplies, energy, and taxes and government policies form the four major cost inputs of the facilities management services category.

List of Key Suppliers in the Facilities Management Services Category

• Jones Lang LaSalle IP Inc. (JLL)

• Sodexo

• CBRE Group, Inc.

• Compass Group plc

• Cushman & Wakefield Global, Inc.

• MAB Facilities Management

• Aramark Corporation

• EMCOR Facilities Services, Inc.

• OCS Group

• Serco Group plc

• Veolia Environment S.A.

• Tenon Group

• ISS A/S