Industries – Business Services

BUSINESS SERVICES

In addition to digitalization, network-based providers of professional services in particular are important drivers of developments in the service sector. The M&A partnership Globalscope enables IFBC to support its clients in the worldwide search for suitable target companies and interested buyers in order to support service companies in developing their business model accordingly.

YOUR CONTACT PERSON

Fabian Forrer, CFA
Partner
fabian.forrer@ifbc.ch

CURRENT TOPICS & CHALLENGES

Digitization further pushes consolidation in the market for logistics services

In the logistics sector the continuous digitization poses major challenges especially for small and medium-sized companies fueling the persisting consolidation trend in the industry. Increasing start-up investments indicate a fundamental disruption in the last mile delivery services through delivery drones, autonomous vehicles, and crowdsourced delivery services.

Satisfying customer needs through flexibility

In the Professional Services area, growing customer needs for a fast, high-quality service delivery are increasing the importance of on demand workforce and flexible working models that can be adapted to the fluctuating customer demand. In addition, professional service firms continue to acquire smaller consulting firms to gain additional know how in order to expand their offering with highly specialized consulting services especially in the fields of digitization and analytics.

Increasing linkage of products with services

In the industrial services segment, offerings linking physical products and digital services are emerging. The data gathered through increasing interconnected sensors in production lines (Industrial Internet of Things) are giving rise to new service offerings. For example, predictive maintenance can be used to plan maintenance work in a targeted manner and thus increase the efficiency of production plants.

NOTABLE RECENT TRANSACTIONS

Danish group DSV takes over Panalpina

In August 2019, DSV completed the acquisition of the Swiss logistics company Panalpina. Panalpina, which is active in air and ocean freight as well as contract logistics, employs more than 14,500 people globally. The acquisition resulted in one of the world’s largest logistics companies with around 60,000 employees.

Luckabox realizes seven-figure pre-series A financing round.

Logistics start-up Luckabox offers a platform to connect logistics service providers to companies demanding logistics services. Luckabox realized a seven-figure pre-series A financing round in September 2020. The successful financing round illustrates the increasing importance of innovative delivery services, especially on the last mile.

Hinderling Volkart becomes part of Dept

In January 2020, the leading Swiss digital agency Hinderling Volkart announced that it will become part of the Dutch company Dept which is present in more than 13 countries worldwide. Hinderling Volkart is a multiple award-winning Swiss digital agency. Its approximately 60 employees work at three locations in Zurich, Bern and Basel for clients such as SwissRe, Edelweiss, Swiss and Switzerland Tourism.

OUR PROJECTS

Other clients
Company valuations in connection with the Swiss tax reform (STAF)

IFBC was mandated by EF Education First to value several EF companies to the attention of the Swiss tax authorities in connection with the Swiss tax reform (STAF). In cooperation with EF Education First, a standardized template was developed for the local managements, which subsequently enabled IFBC to efficiently value the companies. The company valuations are based on the DCF-approach and were documented in a valuation report.

EF Education First offers learning programs worldwide focused on language, travel, cultural exchange, and academics.

Valuation of selected group companies

IFBC was engaged by the Diethelm Keller Group to perform independent valuations of selected group companies. Together with the management and considering analysts' expectations for the corresponding peer companies, business plans were developed for the respective companies, which were used as a basis for the discounted cash flow valuations. Based on sensitivity analyses with reference to the main value drivers, appropriate value ranges were derived for the companies to be valued.

Diethelm Keller Group is a privately held organization whose principal shareholders are the descendants of the founders. In addition to the participation as major shareholder in DKSH, a leading company in the field of market expansion services with a focus on Asia, the group consists in particular of four operating units in different business areas with over 2’500 employees in 20 countries.

Implementation of the Purchase Price Allocation of Swissport in accordance with IFRS

In the context of the acquisition of Swissport by a group of financial investors, IFBC was mandated to carry out the purchase price allocation in accordance with the requirements of IFRS and considering best practice. The results of the purchase price allocation were summarized in an expert opinion for the attention of the auditors.

Swissport International Ltd. is a globally leading provider of aviation ground handling and cargo services with a presence at around 300 airports worldwide.

Development of a standardized impairment model

IFBC was engaged by Swissport to develop a standardized impairment model which complies with the requirements of IAS 36 and reflects best practice in company valuation.

Swissport International Ltd. is a globally leading provider of aviation ground handling and cargo services with a presence at around 300 airports worldwide.

M&A TRENDS AND MARKET ANALYSIS

The following graphs analyse the services industry over the past five years. The graphs show the development of the average semi-annual transaction multiples as well as a comparison between the trading multiples of listed companies in individual sub-sectors and per region as of the end of June 2020. The analysis is based on the Bloomberg database. In terms of size, a distinction is made between companies/transactions with a market capitalization of below (low-mid market) or above (large companies) USD 150 million.

Time series of EV/EBITDA multiples of listed companies

Low-Mid Market
Large Companies

  • The trading multiples shown are based on the enterprise value (EV) at the reporting date and the forecast EBITDA for the following 12 months.
  • Over the last five years, the average trading multiple in the lower-mid-market (market capitalisation < USD 150 million) included an average discount of about 32% compared to the average trading multiple of large companies (> USD 150 million).
  • The increase in the first half of 2020 is likely to be due to the currently low forecasted EBITDA level.

EV/EBITDA multiples of listed companies split by region as of 30.06.2020

Low-Mid Market
Large Companies

  • The trading multiples for larger companies range from 6.6x to 10.2x, with Asia Pacific showing the highest value.
  • The discount of the lower mid market varies greatly across regions. In the Middle East and Africa region, lower-mid market companies currently have a premium compared large companies.

EV/EBITDA multiples of listed companies split by subindustry as of 30.06.2020

Low-Mid Market
Large Companies

  • With a bandwidth of 8.9x to 10.1x for the large companies, the valuation level as of June 30, 2020 is close together in the industry. The Professional Services sub-sector has the highest value with a multiple of 10.1x.
  • The companies in the Lower-Mid Market show a discount in the valuation level compared to the large companies. Among these companies, the Professional Services sub-sector also has the highest multiple of 8.0x.

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