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By 2025, millennials will comprise 75% of the global workforce. However, they are already dramatically influencing the way businesses operate, with their focus on work-life balance and flexibility over long hours and high pay.
The millennial effect is visibly rubbing off onto corporates, as they embrace a more agile way of working. This can be seen in three key areas:
(1) Workplace strategy
Corporates are breaking free from traditional real estate and procurement models and riding the co-working wave. This has brought about a rise in demand for flexible, 'one-stop shop' workspace solutions based on short leases, cost certainty and the simplicity of one simple contract.
(2) Lean back office functions
To make their operations more efficient and responsive, a growing number of corporates are looking to outsource the majority of their key back office functions. This follows a trend of deploying headcount on a more variable, ad hoc basis as and when it is needed, rather than retaining it in-house.
(3) Embracing technology
Leveraging technology is critical for corporates hoping to encourage employees to work how, where and when they want. As such, they are increasingly using technology to provide a flexible working environment, be it through mobile devices, cloud computing or on-demand apps.
The growth of the 'agile business' has had a marked effect in terms of M&A. We continue to see technology-enabled business process outsourcing companies, differentiated headcount-based consultancies and software providers demand premium valuations, which are increasingly coming from the international private equity community.
For example, in 2017 global co-working giant, WeWork, received a $4.4bn investment from SoftBank, taking its valuation up to $20bn. Also in the flexible working sector, Blackstone acquired a stake in The Office Group, valuing the business at £500m. Meanwhile, Civica, which provides software and technology-based outsourcing services, was acquired by Partners Group, a Swiss private equity firm for £1.1bn at a 19.2x EBITDA multiple.