United States

Valuations key concern for business products and services industry

3Q 2015 Business Products and Services Industry Spotlight


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Although the U.S. business products and services (B2B) sector continues to see healthy deal activity, the sector as a whole is going through a transitional period. Buyers continue to pay frothy multiples to close deals, yet from a performance perspective, many companies may not warrant those heightened multiples.

Adding to this, bottom-line cushions expected by B2B companies from subdued energy prices appeared to be offset by some of the same costs related to high multiplies, along with forex volatility, in certain currencies abroad. While the transitional period could lead to a slowdown in B2B deal flow, the middle-market B2B market should outperform other industries, due to there being more quality companies available for sale in that market.

Driven by a continued appetite to find synergistic acquisition targets, B2B M&A activity in Q2 remained relatively strong. While counts were down, compared to the unexpected uptick seen in Q1, aggregate capital invested was up a rather impressive 49 percent quarter on quarter.

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