Business services continued to attract investment and consolidation during 2024 as companies responded to slower organic growth, labour shortages, regulatory pressures and the increasing use of artificial intelligence and data.
Polestar Corporate Finance’s Business Services 2024 Sector Review and 2025 Outlook explores M&A activity, investor appetite and valuation trends across consulting and professional services, construction services, facilities management, food services, logistics, imports and distribution, and marketing and communications.
Trade buyers accounted for more than half of business services transactions during 2024.
Consolidation continued across legal services, accountancy and distribution, while consulting and professional services maintained consistently high levels of deal activity.
Construction services recorded increased transaction activity during the year. Logistics, imports and distribution also experienced strong deal volumes despite the uncertainty created by elections.
The Bank of England and US Federal Reserve reduced interest rates following the peaks recorded in 2023.
Although UK borrowing costs remained high, greater confidence that interest rates were no longer increasing contributed to a more positive outlook for lower and middle-market dealmaking in 2025.
European private equity activity increased by an estimated 18% year on year during 2024 following a period in which high borrowing costs had constrained dealmaking.
Deal value also increased by an estimated 13% in the US and 12% globally.
At the beginning of 2024, private equity firms held approximately 28,000 portfolio companies with a combined value of £2.5 trillion. The proportion of assets held for more than five years had increased by 18% since the end of 2022.
Exit activity increased during 2024:
Further private equity exits during 2025 were expected to release capital for reinvestment and support renewed dealmaking.
Corporate-led transactions accounted for 63% of overall UK M&A activity during 2024.
Corporate acquirers had proved more resilient during the preceding downturn in global dealmaking. Many companies had also accumulated cash during the period of economic uncertainty, strengthening their capacity to pursue acquisitions.
UK consulting revenues almost doubled over five years, increasing from £10.6 billion in 2018 to £20.4 billion in 2023.
The rate of growth was expected to slow, encouraging businesses to consider other ways of improving financial performance.
Consolidation continued across the sector as acquirers looked for businesses offering:
The number of FCA-regulated investment advisory firms decreased by 6% during the preceding year, despite a 7% increase in the number of advisers.
Consulting and professional services maintained consistently high deal volumes during 2024. Companies capable of filling market niches, expanding an acquirer’s geographical coverage or providing cross-selling opportunities could attract valuation premiums.
Lower productivity and changing expectations around work-life balance contributed to staff shortages across business services.
AI tools offered businesses an opportunity to bring repetitive tasks in-house while allowing employees to focus more of their time on critical thinking.
Financial institutions were among the organisations adopting agentic AI. JP Morgan provided AI tools to all its employees.
AI systems still needed to keep employees engaged with their work so that people continued to apply critical judgement when completing AI-supported tasks.
During 2024, 30% of executives said their organisations were primarily experimenting with AI in low-risk, non-core functions to gain experience and confidence.
Business leaders expected their focus to move from experimenting with AI towards scaling, optimisation and innovation.
IBM Institute for Business Value figures showed the anticipated change between 2024 and 2025:
A human-centred AI strategy required businesses to consider:
Flexible working also continued to grow, with freelance earnings increasing by 59% year on year.
Data analytics and machine learning enabled businesses to evaluate customer interactions and provide more personalised services.
Moving away from multiple spreadsheets towards more immersive systems could support regular strategic planning and make data easier to access and use.
Technology integration and ESG consultancy represented areas of opportunity as businesses placed greater importance on investing in technology and sustainability.
Digital tools continued to change how marketing and communications services were delivered.
Voice-activated devices created a need for businesses to consider voice marketing within their strategies.
Social media was also developing into a distinct search channel for shopping, creating opportunities for smaller companies to reach customers at relatively low cost.
Automated, data-driven recommendations were increasingly being used to support sales and customer engagement.
Businesses that prioritised customer engagement experienced a 63% reduction in customer churn, based on Forrester findings included in the review.
Approximately 50 million of the UK’s 60 million consumers actively shopped online, maintaining demand for logistics and warehousing services.
Almost half of UK companies had budgeted between 6% and 10% of their spending for investment in supply-chain technology.
Almost 500,000 driver qualification cards expired during 2024. The resulting need for retraining created opportunities for businesses supporting driver development and qualifications.
Rising National Insurance costs were expected to encourage earlier investment in warehouse automation.
However, complex activities such as last-mile delivery were expected to remain largely human-led in the short term, despite Amazon’s drone-delivery trial.
Businesses also continued to manage supply-chain disruption through near-shoring and friend-shoring.
Consumer behaviour and technology continued to affect food-service businesses.
Premium ready meals and meal kits offered consumers a restaurant-style experience at home. Supermarkets expanded their ready-to-eat ranges and used delivery platforms to compete within this market.
Demand for employee lunches increased by 32% year on year as more employees returned to offices. Delivery businesses such as Deliveroo also continued to grow.
Within the beverage sector, functional and sustainable products were expected to support activity. Changing attitudes towards alcohol created opportunities for healthier alternatives within hospitality venues.
Digital tools also supported franchise expansion by helping businesses maintain consistent systems while using data to adapt to local demand.
Regulatory requirements continued to create demand for reporting and monitoring services within construction.
Energy-efficiency targets supported demand for building-retrofit services, while UK Government funding and the Planning and Infrastructure Bill were expected to increase project activity.
Areas of opportunity included:
Digital tools such as building information modelling and drones were expected to become more accessible to smaller construction firms.
Companies with trained engineering and architectural employees could also attract buyers seeking to expand while addressing skills shortages.
Facilities management businesses continued to accelerate their digital transformation.
Important areas of focus included:
Businesses with established ESG data-collection processes and accessible sustainability information could attract acquisition interest as larger companies responded to increased reporting requirements.
Business services valuations and EBITDA multiples experienced less fluctuation than those across Polestar CF’s other sectors because the market contained fewer disruptive verticals.
Some volatility occurred towards the end of the first quarter across:
Food-service volatility was partly caused by Groupon’s TEV/EBITDA multiple increasing from approximately 15x to 22x.
Marketing and communications multiples remained elevated throughout the second quarter.
EBITDA multiples generally increased during the early part of 2024. The peaks were associated with US businesses within the comparison groups. Major market indices reached a 52-week high at the end of February before reversing following higher-than-expected inflation.
Trade buyers accounted for more than 50% of business services deals during 2024.
Transaction activity remained consistently high as consolidation continued.
Premiums were available for companies able to:
Construction services recorded increased transaction activity during 2024.
Companies with qualified engineering and architectural employees could attract buyers seeking to expand their businesses and manage skills shortages.
Facilities management businesses with established ESG data-collection processes and accessible sustainability information were attractive acquisition targets as larger companies faced increased reporting requirements.
Logistics, imports and distribution maintained strong transaction activity despite the uncertainty created by elections during 2024.
Private equity maintained strong interest in consulting firms across both growth-capital and buyout transactions.
Buy-and-build strategies remained popular. Investors used acquisitions to capture market share and support growth in a market where public-company multiples remained relatively flat.
Private equity investors typically targeted a return of at least three times their initial investment on exit.
Although many business services companies generated repeat and recurring revenue, the market itself was not expanding significantly. Acquisitions therefore provided a way to increase market share and accelerate growth.
Trade consolidation continued across professional services, particularly among accountancy firms.
Strategic acquirers sought businesses that could provide:
BGF completed 12 UK investments during 2024. Example transactions included:
These companies operated across outdoor play equipment, social media management, and water and energy consultancy.
Inflexion Private Equity completed seven UK investments. Transactions included:
Oakley Capital completed five UK investments. Transactions included:
Both transaction values were undisclosed.
Streets LLP completed six acquisitions of accountancy firms during 2024:
All transaction values were undisclosed.
QuestGates completed five acquisitions:
The acquisitions expanded its capabilities across forensic accounting, structural design, engineering consultancy, loss adjusting and compliance investigations.
FirstGroup completed three acquisitions:
Anderson Travel and First Rail Stirling were acquired for undisclosed amounts.
Brainlabs was acquired by Falfurrias Management Partners for £180 million in June 2024, representing a reported enterprise-value-to-revenue multiple of 8.8x.
Thursfields Solicitors was acquired by Knights for £12.5 million in September 2024.
Kitwave Group acquired:
Topek Southern provides fire-remediation and contract-refurbishment services.
Brickability Group acquired the company for £46 million in January 2024, representing a reported enterprise-value-to-revenue multiple of 1.2x.
InPost acquired Menzies Distribution for £60 million in October 2024.
Siterwell acquired FireAngel Safety Technology Group for approximately £28 million in July 2024, representing a reported enterprise-value-to-revenue multiple of 0.6x.
Consolidation, AI adoption, labour shortages, regulatory requirements, data analytics and technology-enabled service delivery were among the principal trends affecting business services.
Consulting and professional services maintained consistently high deal volumes. Construction services recorded increased transaction activity, while logistics, imports and distribution also experienced strong deal activity.
UK consulting revenues almost doubled between 2018 and 2023, but the rate of growth was expected to slow. Acquisitions offered businesses a way to add specialist skills, enter new geographical markets, create cross-selling opportunities and increase market share.
Business services companies can offer repeat and recurring revenue, specialist expertise and opportunities for buy-and-build strategies. Private equity investors used acquisitions to capture market share and support growth.
Trade buyers seek client relationships, geographical coverage, specialist capabilities, efficient technology systems and sustainable supply chains.
AI enables companies to automate repetitive work and allow employees to focus on tasks requiring critical thinking. Businesses were expected to move from experimentation towards scaling, optimisation and innovation during 2025.
Logistics businesses were investing in supply-chain technology and warehouse automation. Near-shoring and friend-shoring were also being used to manage supply-chain disruption.
Facilities management companies with established ESG data-collection processes and accessible sustainability information could attract buyers responding to increased reporting requirements.
AI implementation, employee reskilling, data analytics, ESG consulting, warehouse automation, smart-building maintenance, construction retrofitting and digital marketing were important areas of focus.
