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      Business services dominated the PE deal market in 2024 led by activity in the professional services sector – accounting services in particular. Now, dealmakers are looking to execute a similar playbook in other subsectors such as legal services. Building on data presented in KPMG’s Private Equity Landscape report, this article explores the evolving business services deals market.

      Business services remained the most active sector for Private Equity deals in the UK in 2024. As noted in KPMG’s Private Equity Landscape report, business services represented 43 percent of the year’s total volume and 33 percent of its total value. In absolute terms, the sector saw activity grow more than 10 percent year-over-year, with values up 11 percent to £53.1 billion. Clearly, PE investors remain focused on the business services sector.

      Much of the attention over the past few years has been on the accounting sub-sector with upwards of 20 large platforms now established in the UK market. There have also been a number of rather successful exits, particularly towards the end of 2024, that bolstered confidence in the buy-and-build strategy in accounting. While activity in the accounting sub-sector has been feverish recently, we expect PE investment to remain strong as firms look for additional targets to bolt on to their platforms ahead of exit.

      Looking for new opportunities

      Helen Roxburgh
      Helen Roxburgh

      Partner, Corporate Finance

      KPMG in the UK

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      Building on the successes being experienced in the accounting sector many PE houses have cast their eyes towards other, similar sub-sectors that offer a clear contracted base of recurring revenues and opportunities to consolidate a fractured market. Two big areas have emerged.

      One is TIC – Testing, Inspection and Certification. While the subsector has been a focus of PE investors for some time, we have seen a significant uptick in deals in this space, encouraged by the stability of strong B2B business models with standardised solutions. Already, there are a number of larger platforms trying to acquire bolt-ons in this space. We expect activity to remain strong, particularly for mid-sized PE firms.

      The other big focus area is legal services. Perhaps even more fragmented than the accounting sector was ten years ago, the legal services sector is seeing significant activity (in some cases, from PE funds that recently exited an accounting platform and are now executing a similar play in legal; in others, from PE funds who feel like they missed the opportunity to make an investment in accounting services). Some are looking for general legal platforms to support a roll up strategy. Others are more focused on specific niche service and practice areas. As we noted in our Private Equity Landscape report, legal services seems set to become the next wave of opportunity for UK PE firms.

      5 steps to success

      At KPMG, we have a team of 30+ deal professionals dedicated to the business services sector where we advise a wide range of buy-side and sell-side dealmakers and investors. Our deep and extensive experience suggests there are five simple things that PE firms could start doing in order to maximise their opportunities in the business services sector.

      • Learn lessons from accounting

        The accounting sector has delivered significant value for PE firms but there have also been challenges and lessons learned along the way. It’s worth examining the past to understand what will succeed in the future.

      • Don’t succumb to FOMO

        As the accounting craze took off, we saw a number of PE firms rush to win deals. Take the time to build, test and assess a robust long-term investment strategy to guide and focus your activities.

      • Dive into the sub-sector

        Accounting services and legal services are not the same, so take time to understand the specific dynamics of the sub sector in advance of making your investment. Start talking to founders, partners and owners to understand their deal expectations, build your reputation and experience in the sector, and create trusted relationships with potential targets down the road.

      • Pick the right targets

        This is about ensuring you have a golden thread that runs from your investment strategy through due diligence, dealmaking and integration. Understanding the nuances of acquiring, integrating and operating partnerships will likely be particularly valuable.

      • Speed up the deal process

        In a fast-moving deal environment, you need an efficient deal process to enable you to take advantage of opportunities as they arise. Consider how technology – AI in particular – might help speed up your deal process.

      Winning in a hot market

      In our Private Equity Landscape report, we note that assets in the business services space which provide a strong degree of revenue visibility and security (and consolidation potential) will continue to be attractive through 2025. We expect legal services and TIC to join accounting as particularly hot areas over the coming year.

      With significant new opportunities emerging and a proven playbook for building platform businesses, we believe business services will almost certainly continue to dominate the deals market in 2025.

      Our advisory insights

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