While businesses within the ‘business service’ sector don’t themselves produce tangible commodities, private equity has long banked on the sector to produce tangible returns (even as those returns are under pressure from a hyper-competitive landscape). Indeed, a common trait in this diversified sector is the competition faced from the very businesses it serves – in other words, most business support services can be competently undertaken in-house. Offshoring helped drive the fortunes of (and investments in) the sector a decade ago. Competition, resulting from a low barrier to entry, has driven other industry dynamics to the fore, most notably sector specialization and consolidation. Though business support services will always remain a significant sector in any mature market, these underlying dynamics will affect industry trajectory and may further impact investment strategy.
Where We Play
At Accordion, we understand the complicated dance sponsors must undertake when seeking returns in a sector with a crowded competitive landscape. Whether in support of roll-ups, carve-outs, merger integrations, corporate development, or FP&A practices, we help create value for our business services clients, so their institutional owners can continue to produce returns.
Many verticals within the business services sector remain ripe for consolidation – economies of scale and margin expansion opportunities exist throughout the value chain for well-developed platform strategies.