KBS - Equipment-as-a-Service - Market Insight

Several key factors influence valuations in the EaaS sector, with a focus on recurring and predictable revenue and technology integration.

Recurring and predictable revenue: The strongest driver of higher multiples in the EaaS sector is the presence of recurring revenue streams such as subscription fees, long-term rental contracts and service agreements. Therefore, revenues under contract, usage-based billing tied to essential services, or auto-renewal subscription models will typically command higher EBITDA multiples than solely one-off rental businesses. Technology integration: EaaS firms which have heavily invested in advancing their technological capabilities (e.g. offering data analytics or proprietary software platforms) command a higher multiple. Tech-enabled companies have better scalability and a stronger competitive advantage, with higher barriers to entry. Energy transition and net-zero commitments: Due to the UK’s target of being net-zero by 2050, combined with energy efficiency mandates and carbon pricing, businesses and public entities are turning to EaaS providers. This demand increases growth potential, justifying higher valuations. Market position and growth trajectory: Fast-growing EaaS firms are using their market position to command higher multiples due to the demand in the sector. Leadership in specific sub-sectors (e.g. the NHS or schools) can also drive up premiums. Strategic buyer synergies: Strategic acquirers, including utilities, infrastructure and energy tech firms, may value EaaS platforms higher due to customer base access, cross-sell opportunities, geographic expansion and platform capabilities.

Regulatory certainty and incentives: Clarity in UK government policies boosts investor confidence, and incentive schemes for decentralised energy or behind-the-meter (BTM) solutions raise perceived value.