Q1 2024 Business Services Market Overview

It’s clear business services weren’t a catalyst for Q1 market gains.

SOLIC Capital Advisors’ Business Services Index was flat for Q1 2024, compared with a 10.8% increase experienced by the S&P 500. Stronger than expected economic growth and employment reports drove the broader market to record levels.

Performance within SCA’s Business Services Index varied significantly by sector:

  • Professional Staffing was down 11.0% as reduced employee turnover and moderating wage growth is enabling employers to aggressively reduce reliance on temporary staffing and the need for placement services.

  • Business Process Outsourcing also declined by 10%, as it continues to face concerns that automation from emerging AI applications will replace traditional customer care, accounting and billing services.

  • On the other hand, Marketing Services, which continues to be driven by accelerating demand for digital marketing services, was up 8% and Information Services, which is benefiting from accelerating need for access to proprietary data bases and data gathering services, was up 10%.

M&A activity in Business Services during Q1 2024 was characterized by a rebound in private equity investment, with a number of high profile PE platform investments completed during the quarter.

Notable transactions include:

  • Omnicom Group (NYS:OMC) acquired Flywheel Digital, provider of digital marketing services intended to help consumer product companies accelerate brand growth in digital retail.

  • Aquiline Capital Partners acquired Health Prime International, a provider of revenue cycle management (“RCM”) solutions for physician practices with to over 800 clients across 50 specialties.

  • Resources Connection (NAS:RGP) acquired Reference Point, a management consulting firm offering services such as process optimization, business management, strategic planning, post-merger integration, data services, risk, and regulatory compliance.

  • General Atlantic and Stone Point Capital entered into an agreement to acquire HireRight (NYS:HRT) a global provider of workforce risk management and compliance solutions including comprehensive background screening, verification, identification, monitoring, and drug and health screening services.

  • H.I.G. Capital acquired CHA Consulting, a provider of design, engineering, and consulting services intended for infrastructure project developers.

  • OneDigital, a portfolio company of New Mountain Capita and Onex, acquired Tru HR Solutions, a provider of onsite and remote HR support, including HR functions management, compliance, employee engagement, training, and investigations.

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