Commercial & Industrial Services: Six Subsectors to Watch

As the Harris Williams Business Services Group explores in this new report, six subsectors of the commercial and industrial services (C&IS) sector merit close attention from potential buyers in today’s uncertain environment. Although these subsectors are distinct from each other, they share a host of attractive characteristics that make them recession-resilient and ripe with investment opportunity:

  • Consistent regulatory demand despite economic conditions
  • Predictable and resilient demand, as many of these services are deemed “essential” and are recurring and contractual, non-deferrable, mission-critical services
  • Skilled professional requirements, due to the complexity of the services offered
  • Stable, growing end markets
  • A high degree of fragmentation and consolidation potential  

Fire and Life Safety Services – These businesses provide critical design, installation and maintenance of complex, regulatory-driven fire prevention, suppression and other life safety systems. It is a growing market with ample long-term consolidation opportunity.

Food and Beverage Industry Services – Companies in this space provide highly specialized, mission-critical capabilities to the broader food service industry, including equipment and technology services as well as safety and sanitation services. Demand is driven by non-discretionary expenditures to ensure the safety of the U.S. food supply, an increased number and complexity of government regulations, and overall growth of the U.S. foodservices ecosystem.

Facility Services – A variety of outsourced service providers support technical needs for specialized mechanical services such as HVAC, elevators and plumbing. Companies in this subsector also provide soft services such as facility cleaning—for which the COVID-19 pandemic has increased demand. It is an enormous market of diverse customers and service providers with differentiated, highly specialized needs and services. It offers investors the opportunity to invest in large, stable markets with recession-resilient demand and a compelling consolidation strategy.

Property Restoration Services – These companies provide mitigation and reconstruction services to properties with damages or losses due to a variety of regularly recurring loss events. Consistent, predictable revenue streams are supported by the rising frequency of events, the non-discretionary nature of these services, and the role of insurance companies as payers.  

Landscaping Services Businesses in this subsector provide landscaping maintenance and development services to commercial customers, as well as ancillary services such as tree care and snow removal. Highly recurring, contractual maintenance services drive consistency of revenue. Premier companies will continue to attract investor attention due to core market growth, recurring revenue, and the opportunity to consolidate a highly fragmented market.

Environmental and Waste Services – Companies in this industry provide regularly scheduled trash and recycling collection services as well as more complex, highly regulated hazardous and non-hazardous waste disposal, site cleanup and remediation, environmental consulting, and chemical and energy safety services. These are largely contractual, non-deferrable and mission-critical services, supporting a consistent and predictable revenue base that has been elevated in priority by the COVID-19 pandemic.

In our new report we explore the details on these market opportunities, including market size and segmentation, unique characteristics that make each subsector attractive to investors, notable companies in the subsector, and recent M&A activity.

Download the full report to learn more.

Published August 2020