KBS - Facilities Management - Market Insight

MARKET INSIGHT – FACILITIES MANAGEMENT

MARKET INSIGHT

The UK facilities management (FM) sector is experiencing a phase of consolidation, innovation and steady, strategic evolution.

The outsourced FM market is now valued somewhere between £60 and £70bn, depending on the scope, with forecasts pointing to a compound annual growth rate (CAGR) of roughly 2.7–3.0% over the next few years. Underlying demand remains strong, especially for ‘hard services’ (e.g. mechanical, electrical, plumbing and compliance-driven maintenance) which continue to make up the majority of service delivery. However, ‘soft services’ (workplace experience, hygiene, cleaning, occupant wellbeing) are gaining traction as organisations rethink their premises in light of hybrid-working, ESG obligations and evolving employee expectations. Crucially, the sector is embracing technology — from IoT sensors and remote monitoring to predictive maintenance and smart-building systems — enabling more efficient, data-driven operations, lower energy consumption and compliance with tighter sustainability and regulatory standards. For businesses in real estate, property services or any organisation with a substantial estate footprint, this is a good time to revisit FM strategy — outsourcing is no longer only about keeping the lights on, but about optimising cost, compliance, workplace quality and environmental impact.

Revenue Combined Facilities Support Activities in the UK Total value (£) and annual change from 2013 - 2031. Includes 5-year outlook.

25

15%

Forecasted

2026 Annual Revenue (£bn) 18.9 2026 Change 0.3%

20

10%

15

5%

10

0%

5

-5%

0

-10%

2014

2016

2018

2020

2022

2024

2026

2028

2030

Category

Change (%)

Annual Revenue (£bn)

Source: IBISWorld

FACTORS DRIVING GROWTH 1. RISING DEMAND FOR COST EFFICIENCY AND VALUE FOR MONEY Due to inflation, rising energy costs and cost pressures across real estate portfolios, organisations are increasingly outsourcing FM to specialist providers who can deliver a predictable, efficient service at a lower total cost. 2. COMPLEXITY OF MODERN BUILDINGS AND SMART-BUILDING SYSTEMS Today’s commercial properties often incorporate advanced HVAC, lighting, energy, security and automation systems. Such complexity requires professional FM providers with the technical and data-management capabilities to maintain, optimise and monitor them. 3. TECHNOLOGY ADOPTION, DATA ANALYTICS AND PREDICTIVE MAINTENANCE The convergence of IoT, sensors, building-management systems and FM software enables predictive maintenance, remote monitoring, energy optimisation and better utilisation of space. This reduces downtime, improves efficiency and adds strategic value. 4. SUSTAINABILITY, ESG AND REGULATORY PRESSURE Many organisations now prioritise sustainability, energy efficiency and environmental compliance. Outsourcing FM to specialist providers helps them meet green targets, achieve certifications and deliver on ESG obligations. 5. CHANGING WORKPLACE BEHAVIOURS AND HYBRID WORKING MODELS As hybrid working becomes more embedded, companies are rethinking how office space is used. This drives demand for flexible workplace services, space optimisation, and FM that supports employee experience and wellbeing (cleaning, hygiene, comfort, flexible space layouts). 6. INCREASING OUTSOURCING OF NON-CORE SERVICES Businesses across various sectors (commercial, public sector, education, healthcare, retail) are increasingly outsourcing maintenance, cleaning, security and other non-core functions, focusing instead on their core operations. That creates a growing, addressable market for FM providers.

CURRENT LANDSCAPE

• Hard FM continues to dominate growth as buildings become more complex and regulatory burdens increase.

• Soft FM remains stable, boosted by hybrid working and rising standards around wellbeing.

• Outsourcing is still the preferred model, with many organisations shifting to integrated FM contracts for cost control, compliance and simplicity.

• ESG, energy efficiency and sustainability pressures are reshaping requirements, pushing demand for tech enabled, data-driven FM solutions.

• The sector is fragmented but consolidating — mid-sized and specialist providers are being acquired by larger groups and PE-backed platforms.

• Private equity activity is high, driven by predictable contracted revenue, cross-sell opportunities and the ability to build scale through buy-and-build.

• Labour shortages and rising wage/energy costs remain challenges, but overall demand remains strong due to essential, non-discretionary service needs.

• Outlook is positive: regulatory compliance, ESG performance, ageing estates and digital transformation continue to underpin long-term FM growth and M&A appetite.

The outsourced Facilities Management market is now valued somewhere between £60 and £70bn , depending on the scope, with forecasts pointing to a compound annual growth rate (CAGR) of roughly 2.7–3.0% over the next few years.

M&A ACTIVITY CONTINUES TO RISE

• The number of FM sector deals rose by approximately 29% in 2024.

• 2,166 M&A transactions involving UK targets have taken place in the last three years within the sector.

• The final quarter of 2024 was the strongest quarter for FM deals since Q1 2021.

• A growing share of transactions is being driven by financial investors — in 2024, 54% of deals involved private equity backing, up from 36% in 2022.

Major Markets Segmentation Combined Facilities Support Activities in the UK Industry revenue in 2026 broken down by key markets

Offices (£8.1bn)

42.6%.

Public Sector (£4.6bn)

24.5%

Hospitality (£2.3bn)

12.3%

Industrial Sector (£1.8bn)

9.6%

Retailers (£1.0bn)

5.5%

Other (£1.0bn)

5.5%

Source: IBISWorld

FACTORS DRIVING APPETITE FOR M&A

• Recurring, contracted revenue – Long-term FM contracts provide stable cashflow, high visibility on earnings and lower risk, making FM highly attractive to both trade buyers and private equity investors.

• Compliance-driven demand – Fire safety, water hygiene, electrical testing, energy efficiency and broader ESG obligations create non-discretionary service needs that acquirers value.

• Buy-and-build potential – The fragmented market allows acquirers to bolt on regional or specialist providers to build scale, broaden capability and improve margins.

• Cross-selling opportunities – Acquirers can add complementary services across existing client portfolios, increasing share of wallet and EBITDA uplift.

• Technical capability & hard FM growth – Businesses with strong M&E, reactive maintenance, and compliance services are especially attractive due to higher margins and predictable demand.

• Tech-enabled service models – Acquirers are motivated by providers using IoT, remote monitoring, CAFM systems and data-led maintenance, which support efficiency and premium pricing.

• ESG and energy-efficiency focus – Demand for decarbonisation, energy management and sustainable estates makes FM firms with strong ESG credentials more valuable.

• Sector resilience – Essential, non-discretionary services make FM robust during economic uncertainty, appealing to investors seeking downside protection.

• Access to new markets or sectors – Strategic buyers look to enter new geographies (regional roll-outs) or sectors (healthcare, education, industrial) via targeted acquisitions.

• Workforce and skill acquisition – With labour shortages across technical trades, acquiring a business with a skilled workforce and existing accreditations is a major draw.

FACTORS DRIVING HIGHER VALUATIONS AND EBITDA MULTIPLES In the UK Facilities Management space, we have seen deal values that have been calculated on adjusted EBITDA/ earnings multiples ranging from 5–6x to double-digit figures, depending on various factors such as the quality and predictability of recurring revenue, customer retention rates and overall growth trajectory.

Key factors influencing value have included:

• The quality, length and predictability of contracted revenue, especially where multi-year frameworks or IFM agreements are in place.

• The mix of hard vs soft FM, with M&E, compliance, fire safety, energy management and technical maintenance commanding higher multiples.

• Client concentration and sector exposure, particularly where contracts span regulated or critical infrastructure environments such as healthcare, education, utilities or defence.

• The breadth of accreditations and technical capability, including CAFM systems, remote monitoring, IoT integration and ESG/energy-efficiency expertise.

• Scalability and geographic reach, with acquirers paying a premium for platforms that support buy-and-build growth.

• The strength of the management team and operational processes, including workforce retention, training and service delivery standards.

Industry Market Share by Company Combined Facilities Support Activities in the UK Industry-specific company revenue as a share of total industry revenue

Mitie FM Ltd (£1.2bn)

6.2%

ISS Facility Services Ltd (£831.1m)

4.4%

Emcor Group (UK) plc (£326.5m)

1.7%

CBRE Ltd (£235.7m)

1.2%

Other Companies (£16.4bn)

86.5%

Source: IBISWorld

The number of Facilities Management sector deals rose by approximately 29% in 2024 .

M&A INTEREST FROM ACQUIRERS AND INVESTMENT ROUTES

ACQUIRER INTEREST: •

Strategic (Trade) Buyers – Larger FM groups, building services providers, compliance specialists and energy efficiency operators actively acquire mid-market FM businesses to expand geographic coverage, strengthen hard-services capability, and win access to long-term contracted clients. They are especially attracted to firms with strong M&E expertise, compliance credentials, CAFM systems and multi-sector frameworks. • Private Equity Investors – PE firms remain highly active in UK FM, drawn to its predictable contracted revenues and resilience. They frequently pursue buy-and-build strategies, acquiring regional or specialist FM businesses (M&E, fire and security, water hygiene, technical maintenance) to build scale and margin. • Family Offices and Long-Term Capital – These investors target FM businesses with steady cashflows, essential service lines and long-tenured contracts. They value businesses with strong local reputation, defensible client bases and opportunities to grow through bolt-ons. • International Buyers – Overseas FM groups (Europe, US, Middle East) continue to enter the UK market to gain a foothold in a mature, well-regulated environment. They are particularly interested in UK companies with compliance-driven services or specialist technical capability. INVESTMENT ROUTES: • Trade Sale/Strategic Acquisition – A sale to a larger FM or building services group seeking synergies, expanded service breadth, increased contract density or better national coverage.

• Private Equity Investment – Either majority or minority investment to support growth, fund acquisitions, upgrade systems (e.g. CAFM, IoT), or expand into higher-margin hard-services verticals.

• Minority Investment/Growth Capital – Often used to scale operations, invest in technology, recruit technical staff or expand into new sectors such as education, healthcare or utilities.

• Management Buy-Out (MBO) Backed by Investors – Common in the FM space, where experienced management teams acquire the business with support from PE or long-term capital.

KEY ACQUIRERS AND INVESTORS Major players in this sector include:

M&A ACTIVITY IN THE FACILITIES MANAGEMENT SECTOR

MARLOWE ACQUIRED BY MITIE GROUP

Mitie, the UK’s leading technology-led facilities transformation company, acquired Marlowe, a specialist in fire & security and environmental services – adding Marlowe’s 2,700 colleagues to Mitie’s 76,000-strong workforce.

D-MEC ACQUIRED BY EMPOWER GROUP

KBS DEAL

Bedfordshire-based D-Mec, which delivers end-to-end HVAC solutions across three South East counties, was sold to growing M&E group Empower, which is aiming to become a UK market leader in technical services.

CORRIGENDA ACQUIRED BY APLEONA

Apleona, a leading European integrated facilities management company based in Germany, made its third UK acquisition in three years by closing a transaction for Hampshire-based technical facility management company Corrigenda.

IT’S CLEAN ACQUIRED BY ORIAN SOLUTIONS

KBS DEAL

Yorkshire-based commercial cleaning company It’s Clean, which has operated since 1999 and has clients in a wide range of sectors, was sold to Carlisle-based Orian, jointly owned by Westmorland & Furness Council and Cumberland Council.

MAXIM FM ACQUIRED BY OCS

Maxim, one of the fastest growing independent regional facilities management companies in the North East of England, became the sixth strategic UK transaction in 18 months by leading global FM provider OCS Group.

HARROLD-JONES SERVICES (HJS) ACQUIRED BY VENTRO

KBS DEAL

HJS, a respected Birmingham-based provider of electrical, security, fire safety and building refurbishment services, including HVAC and plumbing, was sold to Ventro Group, a UK leader in fire safety and building compliance.

GS ASSOCIATES ACQUIRED BY EXCELLERATE SERVICES

KBS DEAL

Glasgow-based professional cleaning and support services specialist GS Associates was sold to Excellerate in a deal advised by KBS Corporate Finance, expanding the UK footprint of the cleaning and security services group.

TUDOR GROUP ACQUIRED BY ATLAS FM

Well-established Manchester-based commercial and industrial cleaning and support services company Tudor Group joined the family of businesses belonging to Berkshire based Atlas, to expand its national soft-FM platform.

COSMETIC REPAIR COMPANY (NORTHERN) ACQUIRED BY MA GROUP

KBS DEAL

Halifax-based CRC, a damage repair firm serving commercial, retail, and hotel and leisure buildings, was sold to integrated property services company MA Group.

PARETO FM ACQUIRED BY PICTET GROUP

Swiss investment group Pictet acquired a controlling interest in London-based Pareto FM, an award-winning and ESG-driven provider of technical and facilities services to the built environment.

DIAMOND AIR CONDITIONING ACQUIRED BY PCB TECHNICAL SOLUTIONS

KBS DEAL

Diamond, a Scottish-based HVAC specialist which designs, installs and maintains air conditioning, ventilation, plumbing, heating and electrical systems, was sold to PCB, a part of Polish retail-focused technical FM group Sescom.

ENHANCE OFFICE CLEANING ACQUIRED BY WORKPLACE SOLUTIONS

KBS DEAL

Bromley-based contract commercial cleaning company Enhance was sold to Workplace Solutions, whose CEO described the transaction as “a highly complementary and attractive acquisition”.

AC ELECTRICAL (ACE) ACQUIRED BY STORSKOGEN

KBS DEAL

ACE, one of the leading electrical contractors in the UK with a significant presence in the retail, supermarket, local government and hospitality sectors, was sold to Storskogen, a company listed on NASDAQ Stockholm.

CRESSWELL OFFICE SERVICES ACQUIRED BY TOTAL CLEAN

KBS DEAL

Cresswell, which specialises in the provision of a range of cleaning services to the public and private sectors, was sold to Total Clean, a long-established London firm which also offers medical grade decontamination/fogging services.

TRIOS GROUP ACQUIRED BY ARCUS FM

Arcus increased its mobile engineering, technology and project delivery strength in the UK FM market by acquiring Trios Group, a Birmingham-based national provider of facility and property-related services.

SOLUTIONS 4 CLEANING ACQUIRED BY HEB GROUP

KBS DEAL

Solutions 4 Cleaning, an award-winning contract cleaning company which operates across Yorkshire, was sold to Sheffield-based Heb Group, originally an M&E contractor which has diversified its offering into FM.

TRICONNEX ACQUIRED BY FITZWALTER CAPITAL

FitzWalter expanded its technical services capability by acquiring the FM division of Essex-based TriConnex, reflecting growing investor interest in FM businesses with utility linked and long-term contract portfolios.

R. LANGSTON JONES ACQUIRED BY PTSG

KBS DEAL

A supplier of electrical testing services, Coventry-based R. Langston Jones was sold to Premier Technical Services Group, one of the UK’s leading providers of niche specialist services across a range of sectors.

AM SERVICES GROUP ACQUIRED BY PINNACLE GROUP

Pinnacle Group acquired AM Services to strengthen its soft-FM and security footprint across the North of England. The transaction supported Pinnacle’s focus on sustainable, ESG-driven FM delivery.

CONTACT US TODAY

As you can see from the M&A activity section, we have advised on numerous transactions within this sector and maintain a high-level of acquirer appetite and registered buyer interest.

We would be keen to speak with you regarding your potential exit or succession plans. If you are open to exploring this avenue or have any questions regarding these insights, please do not hesitate to call us on 0161 222 0072.

A growing share of transactions is being driven by financial investors — in 2024, 54% of deals involved private equity backing, up from 36% in 2022.

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