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M&A activity remains strong in UK's facilities management sector,... private equity and international buyers return to the market

Merger and acquisition (M&A) activity in the UK's facilities management sector has remained buoyant throughout the third quarter of this year, with a total of 24 deals recorded over the period according to leading business and financial adviser Grant Thornton UK LLP.

The volume of transactions – on par with the same amount seen in the previous quarter – represents the joint highest level witnessed since the second quarter of 2013. However, despite the positive momentum in the sector over the past two quarters, the year-to-date M&A trend remains one of the slowest since 2007, as volumes in the first quarter of the year were exceptionally quiet.

The figures, from Grant Thornton's quarterly Insights into Facilities Management report, present a promising outlook for the sector over the medium term, despite economic uncertainty returning in the Eurozone.

Similar to the previous three months, the third quarter saw renewed interested from the private equity (PE) and international communities. Though only two PE deals were announced in the period, the trend over a nine-month period shows the highest level of PE activity since 2011 and already more than 2013's full-year figure.

International buyers, which generated an important part of the FM sector deal flow in the latter part of 2012 and throughout 2013, also returned in the third quarter of this year after a quiet first half.

David Ascott, Corporate Finance Partner at Grant Thornton UK LLP, commented: "M&A activity has continued on a strong footing over the past quarter, with several high-profile transactions driving total (disclosed) deal value to its highest level in around two years. As the overall market conditions continue to improve and leverage becomes more freely available and flexible, it is more than likely that PE buyers will continue to make their mark on the sector and further drive the volume and values of transactions in the near-term."