21 June 2016 | Jamie Harris

The facilities management market is evolving from a ‘people’ business to a ‘people and data’ business, according to a report from business advisory firm BDO LLP.

The BDO FM UK Market Outlook Report 2016 found that M&A (mergers and acquisitions) analysis of the sector reveals that just over half of deals completed in the past two years involved businesses in the building management systems, M&E and compliance services sub-sectors.

The report notes that the government’s austerity drive in the public sector is making life difficult for service providers to win contracts on any factors other than price.

Slim margins are also being pressed by a number of regulatory requirements such as the introduction of the National Living Wage, says BDO.

M&A transactions are seen as a way to achieve efficiency savings to help position contractors for future growth, adds the report.

The number of mergers in the sector in 2015 increased by 43 per cent on the previous year, with hard services accounting for 77 per cent of transactions.

M&E maintenance transactions in particular recorded a four-fold increase in 2015, compared with 2014.

Management buyouts (MBOs) accounted for 22 per cent of FM deals last year. Nearly four in 20 M&E services deals were MBOs.

Satvir Bungar, head of facilities management at BDO LLP, said: “Despite the pressures faced by FM players, businesses have muted optimism for the year ahead and see a wealth of opportunities including stickier contracts, developing strategic relationships, and initiating new service lines. FM operators are embedding themselves more closely in their client organisations to provide valuable data-led services such as predictive maintenance, asset management and space optimisation services.”

The report is available to view here.