The UK's facilities management sector proves a magnet for foreign investors

For many years, the UK has led the facilities management world in the development and adoption of effective service delivery models and best practice. Boosted by the enthusiastic early adoption of outsourcing as a common-place business model, UK players have enjoyed a head-start in developing innovative solutions which the rest of the world has shown in increasing interest in accessing through acquisition.

However, the pressure to innovate has never been more acute as providers in the UK and other markets seek to address escalating employment costs, increased regulatory scrutiny over flexible labour models and ever-more rigorous workplace health and safety regimes. This pressure is likely to continue to drive M&A-led consolidation in the UK as the burden of investing to keep ahead of these challenges favours groups of genuine scale. The longer term strategic thrust towards single-service players broadening their offerings to deliver multi- or total-service offerings to customers eager to streamline their supplier bases is likely to continue to drive acquisition activity.

Research has revealed that the UK facilities management sector has grown by £15 billion since 2011, with a total UK market value of £125 billion in 2016.

In addition, Arrowpoint Advisory's analysis highlighted renewed foreign interest in UK assets associated with the building and facilities services sector, in part incentivised by a stable economy and weak pound.

Commenting in FM World, Jeremy Furniss argues that these M&A markets have demonstrated great resilience in the face of daunting levels of uncertainty driven by the slew of geopolitical developments, especially the ambiguity of the UK operating outside of the EU. Read more about Arrowpoint Advisory's research and Jeremy's comments on the state of the M&A market in the FM & Construction industry in FM World here.

The sheer weight of capital seeking a home , both private equity and corporate , means that the UK's place as a facilities management market of strategic interest to the rest of the world is likely to sustain deal activity for some considerable time yet.

For a full synopsis on the sector and to request your copy of our Building & Facilities Services Newsletter, please email Rosemarie Lamanno.

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