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.