Market insight – The facilities management sector

Facilities management (FM) in the UK is experiencing a phase of consolidation, innovation and steady, strategic evolution – resulting in a buoyant company sales market for this sector.

The outsourced FM market is now valued somewhere between £60 and £70bn, depending on the scope, with forecasts pointing to a compound annual growth rate (CAGR) of roughly 2.7–3.0% over the next few years.

Underlying demand remains strong, especially for ‘hard services’ (e.g. mechanical, electrical, plumbing and compliance-driven maintenance) which continue to make up the majority of service delivery.

However, ‘soft services’ (workplace experience, hygiene, cleaning, occupant wellbeing) are gaining traction as organisations rethink their premises in light of hybrid-working, ESG obligations and evolving employee expectations.

Crucially, the sector is embracing technology — from IoT sensors and remote monitoring to predictive maintenance and smart-building systems — enabling more efficient, data-driven operations, lower energy consumption and compliance with tighter sustainability and regulatory standards.

For businesses in real estate, property services or any organisation with a substantial estate footprint, this is a good time to revisit FM strategy — outsourcing is no longer only about keeping the lights on, but about optimising cost, compliance, workplace quality and environmental impact.

Factors driving growth

1. Rising demand for cost efficiency and value for money — Due to inflation, rising energy costs and cost pressures across real estate portfolios, organisations are increasingly outsourcing FM to specialist providers who can deliver a predictable, efficient service at a lower total cost.
2. Complexity of modern buildings and smart-building systems — Today’s commercial properties often incorporate advanced HVAC, lighting, energy, security and automation systems. Such complexity requires professional FM providers with the technical and data-management capabilities to maintain, optimise and monitor them.
3. Technology adoption, data analytics and predictive maintenance — The convergence of IoT, sensors, building-management systems and FM software enables predictive maintenance, remote monitoring, energy optimisation and better utilisation of space. This reduces downtime, improves efficiency and adds strategic value.
4. Sustainability, ESG and regulatory pressure — Many organisations now prioritise sustainability, energy efficiency and environmental compliance. Outsourcing FM to specialist providers helps them meet green targets, achieve certifications and deliver on ESG obligations.
5. Changing workplace behaviours and hybrid working models — As hybrid working becomes more embedded, companies are rethinking how office space is used. This drives demand for flexible workplace services, space optimisation, and FM that supports employee experience and wellbeing (cleaning, hygiene, comfort, flexible space layouts).
6. Increasing outsourcing of non-core services — Businesses across various sectors (commercial, public sector, education, healthcare, retail) are increasingly outsourcing maintenance, cleaning, security and other non-core functions, focusing instead on their core operations. That creates a growing, addressable market for FM providers.

Current landscape

• Hard FM continues to dominate growth as buildings become more complex and regulatory burdens increase.
• Soft FM remains stable, boosted by hybrid working and rising standards around wellbeing.
• Outsourcing is still the preferred model, with many organisations shifting to integrated FM contracts for cost control, compliance and simplicity.
• ESG, energy efficiency and sustainability pressures are reshaping requirements, pushing demand for tech-enabled, data-driven FM solutions.
• The sector is fragmented but consolidating — mid-sized and specialist providers are being acquired by larger groups and PE-backed platforms.
• Private equity activity is high, driven by predictable contracted revenue, cross-sell opportunities and the ability to build scale through buy-and-build.
• Labour shortages and rising wage/energy costs remain challenges, but overall demand remains strong due to essential, non-discretionary service needs.
• Outlook is positive: regulatory compliance, ESG performance, ageing estates and digital transformation continue to underpin long-term FM growth and M&A appetite.

Factors driving appetite for M&A

• Recurring, contracted revenue – Long-term FM contracts provide stable cashflow, high visibility on earnings and lower risk, making FM highly attractive to both trade buyers and private equity investors.
• Compliance-driven demand – Fire safety, water hygiene, electrical testing, energy efficiency and broader ESG obligations create non-discretionary service needs that acquirers value.
• Buy-and-build potential – The fragmented market allows acquirers to bolt on regional or specialist providers to build scale, broaden capability and improve margins.
• Cross-selling opportunities – Acquirers can add complementary services across existing client portfolios, increasing share of wallet and EBITDA uplift.
• Technical capability & hard FM growth – Businesses with strong M&E, reactive maintenance, and compliance services are especially attractive due to higher margins and predictable demand.
• Tech-enabled service models – Acquirers are motivated by providers using IoT, remote monitoring, CAFM systems and data-led maintenance, which support efficiency and premium pricing.
• ESG and energy-efficiency focus – Demand for decarbonisation, energy management and sustainable estates makes FM firms with strong ESG credentials more valuable.
• Sector resilience – Essential, non-discretionary services make FM robust during economic uncertainty, appealing to investors seeking downside protection.
• Access to new markets or sectors – Strategic buyers look to enter new geographies (regional roll-outs) or sectors (healthcare, education, industrial) via targeted acquisitions.
• Workforce and skill acquisition – With labour shortages across technical trades, acquiring a business with a skilled workforce and existing accreditations is a major draw.

Factors driving higher valuations and EBITDA multiples

Key factors influencing value include:

• The quality, length and predictability of contracted revenue, especially where multi-year frameworks or IFM agreements are in place.
• The mix of hard vs soft FM, with M&E, compliance, fire safety, energy management and technical maintenance commanding higher multiples.
• Client concentration and sector exposure, particularly where contracts span regulated or critical infrastructure environments such as healthcare, education, utilities or defence.
• The breadth of accreditations and technical capability, including CAFM systems, remote monitoring, IoT integration and ESG/energy-efficiency expertise.
• Scalability and geographic reach, with acquirers paying a premium for platforms that support buy-and-build growth.
• The strength of the management team and operational processes, including workforce retention, training and service delivery standards.

M&A interest from acquirers and investment routes

Acquirer interest:

• Strategic (Trade) Buyers – Larger FM groups, building services providers, compliance specialists and energy-efficiency operators actively acquire mid-market FM businesses to expand geographic coverage, strengthen hard-services capability, and win access to long-term contracted clients. They are especially attracted to firms with strong M&E expertise, compliance credentials, CAFM systems and multi-sector frameworks.
• Private Equity Investors – PE firms remain highly active in UK FM, drawn to its predictable contracted revenues and resilience. They frequently pursue buy-and-build strategies, acquiring regional or specialist FM businesses (M&E, fire and security, water hygiene, technical maintenance) to build scale and margin.
• Family Offices and Long-Term Capital – These investors target FM businesses with steady cashflows, essential service lines and long-tenured contracts. They value businesses with strong local reputation, defensible client bases and opportunities to grow through bolt-ons.
• International Buyers – Overseas FM groups (Europe, US, Middle East) continue to enter the UK market to gain a foothold in a mature, well-regulated environment. They are particularly interested in UK companies with compliance-driven services or specialist technical capability.

Investment routes:

• Trade Sale/Strategic Acquisition – A sale to a larger FM or building services group seeking synergies, expanded service breadth, increased contract density or better national coverage.
• Private Equity Investment – Either majority or minority investment to support growth, fund acquisitions, upgrade systems (e.g. CAFM, IoT), or expand into higher-margin hard-services verticals.
• Minority Investment/Growth Capital – Often used to scale operations, invest in technology, recruit technical staff or expand into new sectors such as education, healthcare or utilities.
• Management Buy-Out (MBO) Backed by Investors – Common in the FM space, where experienced management teams acquire the business with support from PE or long-term capital.

Which FM companies have been sold by KBS Corporate?

D-Mec acquired by Empower Group

Bedfordshire-based D-Mec, which delivers end-to-end HVAC solutions across three South East counties, was sold to growing M&E group Empower, which is aiming to become a UK market leader in technical services.

It’s Clean acquired by Orian Solutions

Yorkshire-based commercial cleaning company It’s Clean, which has operated since 1999 and has clients in a wide range of sectors, was sold to Carlisle-based Orian, jointly owned by Westmorland & Furness Council and Cumberland Council.

AC Electrical acquired by Storskogen

AC Electrical, one of the leading electrical contractors in the UK with a significant presence in the retail, supermarket, local government and hospitality sectors, was sold to Storskogen, a company listed on NASDAQ Stockholm.

Cosmetic Repair Company (Northern) acquired by MA Group

Halifax-based CRC, a damage repair firm serving commercial, retail, and hotel and leisure buildings, was sold to integrated property services company MA Group.

If you are a shareholder of a facilities management company, we would be keen to speak with you regarding your potential exit or succession plans. If you are open to exploring this avenue or have any questions, please do not hesitate to call us on 0161 222 0072.