Industrial andCommercialServices
Industry Insights
SUMMER 2024

Learn moreIndustry Highlights
Overview
844

Deals reported in the industrial and commercial
services sector across 2023 and Q1 2024

5%

Annual transaction activity in 2023 is 5% higher thanthe historical levels from 2015-2022

2.0%

Underperformance in industrial and commercial
services stock performance compared to the S&P 500
from March 2023-March 2024

13.7x

Aggregate Median EV / LTM EBITDA multiple within
industrial and commercial services industry• M&A activity in the North American industrial and commercial services
industry slowed in 2023, with a year-on-year (YoY) decrease of 10%
from the elevated levels seen in 2022.
• However, buyer interest in the sector proved remarkably resilient amid
rising interest rates, recession risks and poor public market performance,with annual transaction activity ~5% above the historical levels from2015-2022.
• Elevated interest rates, macroeconomic uncertainty and value
expectations between buyers and sellers created challenges in themarketplace. Nevertheless, the industrial and commercial services
industry remained strong and outperformed the broader market.
• The M&A outlook remains positive due to the accumulation of drypowder, pressure to deploy capital and the fragmented nature of theindustrial and commercial services sector.
• The sector with the highest enterprise value (EV) / last 12 months (LTM)
earnings before interest, taxes, depreciation and amortization (EBITDA)
multiple is environmental services, with a 15.1x multiple. The sector
with the lowest multiple is transportation and logistics services, with an
8.0x multiple.

2Sources: Staffing Industry Analysts, CapIQ, company filings

Market UpdateIndustrial and Commercial Services Industry Overview
Median PublicTrading Multiples

SectorFacilities
Services

TEV1/ LTM Rev: 0.7x

Industrial
Services

TEV / LTM Rev: 3.3x

Environmental
Services

TEV / LTM Rev: 3.2x

TEV / LTM EBITDA: 12.1x

TEV / LTM EBITDA: 14.9x

Construction
andEngineering
Services
Transportationand Logistics
Services

TEV / LTM EBITDA: 15.1x

TEV / LTM Rev: 1.2x
TEV / LTM EBITDA: 14.0x

TEV / LTM Rev: 1.0x
TEV / LTM EBITDA: 8.0x

1) Total Enterprise Value (TEV)

Description of Sector

Key Industry Leaders

Provide a wide array of commercial facility services,
including landscaping and ground maintenance,
janitorial and other services

Supply a range of support and solutions for industrial
facilities and equipment to help maintain, optimize andimprove industrial processes

Serve a diverse set of customers to create a stronger
environment, with common services including collecting,transporting and disposing of waste and garbage

Involve companies that help with the design,development, project management and supervision ofbuildings, roads and other infrastructure projects toprovide cost-effective solutions
Provide a variety of solutions to help with the transfer ofgoods from one location to another. Key services include
management of supply chains, inventory, warehousing,distribution and order fulfillment

4Sector Spotlight: Facilities, Industrial and Environmental Services
Innovation Driving Advancements within the Facilities Services Industry• Increased competition in the facilities services market is leading increased
innovation to gain a competitive advantage in the marketplace.
• Adoption of advanced technology, software and products in cleaning services isbeing utilized to enhance efficiency of services, including robotic floor cleaners,
solar trash compactors and autonomous vacuum cleaners.

Facilities Services Industry($ in billions)$120.4$127.7$135.7$107.8$113.8

2023

2024

2025

2026

2027

Predictive Maintenance a Strong Enabler within Industrial Services• As the demand for Internet of Things-enabled devices has increased within theindustrial services industry, the need for data collection to solve maintenanceproblems has grown.
• Mergers and acquisitions, partnerships and collaborations have become popular
trends used to gain a competitive advantage within the industry.

($ in billions)$42.6

Long-Term Tailwinds to Support Sustained Growth in Environmental Services$46.3$50.32024

2025

$54.6

2026

$59.3

2027

$64.4

2028

Environmental Services Industry($ in billions)

$37.4

2023

Sources: Technavio, Statista, AP News, Custom Market Insights,

2028

Industrial Services Industry2023• Environmental services and waste companies are leveraging AI tools to automate
tasks to combat labor shortages and improve efficiencies within the industry.
• A growing emphasis on sustainability will continue to propel the environmental
services industry to innovate and maintain cleaner ecosystems.

$144.6

$39.8

$42.3

2024

2025

CAGR = compound annual growth rate

$44.9

2026$47.82027

$50.8

2028

5

Sector Spotlight: Construction and Engineering andTransportation and Logistics Services
Key Bills Creating Green Shoots in Construction and Engineering Services• The Infrastructure Investment and Jobs Act, Inflation Reduction Act and Creating
Helpful Incentives to Produce Semiconductors Act are expected to create
increased volume as confidence in the construction and engineering industry
remains high through Q1 2024.

Construction and Engineering Industry($ in trillions)$1.6• As roads, bridges and other aging infrastructure reach the end of their lifespans,the urgency for modernization and innovation becomes critical, creating anopportunity for construction and engineering services.

2023

Global Trade Expanding the Transportation and Logistics Services

$1.7

$1.7

2024

2025

$1.8

2026

$1.92027$2.02028

Transportation and Logistics Industry($ in trillions)• Small- and medium-scale businesses are looking to double their investment intechnology advancements within the transportation and logistics industry,creating an opportunity for services to increase.

$1.3

$1.3

$1.4

2023

2024

2025

$1.5

$1.6

$1.62027

2028• The expansion of trade-related agreements strengthens the industry, fostering a
globalized trading network.

Sources: Technavio, Statista, AP News, Custom Market Insights, Deloitte

2026

6Recent Market ValuationIndicators

M&A Market CommentaryIn 2023, M&A activity in the industrial and commercial services industry was above average, despite challenges in the broader M&A market throughout the year.
In the context of economic challenges and high interest rates and financing costs, there is greater confidence in the macroeconomy reaching a “soft landing,”
creating tailwinds in the marketplace.
Although there was a decrease in M&A activity from Q4 2023 to Q1 2024, there is increased momentum, as there is an abundance of PE capital searching forinvestment opportunities and pent-up demand to deploy capital. Strategic buyers are also looking at M&A as a means for growth with significant cash balances.

Number of Closed Deals: Industrial and Commercial Services Industry
700 Deals
Closed in2023

667 Annual Average of Deals Closed,
2015-2022
250
200

166

181
159

178

172

169
146

150

186 190144

136 142

121

157
124

152

165

171

188 192

184

205

221

236

163

162

202
173 175

167

156

141

120

220

150 144

108

100
50
0Q1Q2Q32015

Q4Q1

Q2Q32016

Q4Q1Q2Q32017

Q4Q1Q2Q32018

Q4Q1Q2Q32019

Q4Q1Q2Q32020

Q4Q1Q2Q32021

Q4Q1Q2Q32022

Q4Q1

Q2Q32023

Q4Q12024
8Sources: Staffing Industry Analysts, CapIQ

Industrial and Commercial Services Public Markets Update
Public Update by Sector

2024 year-to-date industrial
and commercial services
sector has underperformed
the S&P 500 by 4.3%

Subsector

2023 PerformanceMedian EV/LTM EBITDA Multiple

Facilities Services

0.8%

12.1x

Industrial Services

31.9%

14.9x

Environmental Services

33.0%

15.1x

Construction and Engineering Services

69.8%

14.0x

Transportation and Logistics Services

15.7%

8.0x

S&P 500

31.7%

16.2x

Jan 2023-April 2024 Indexed Stock Performance90%

Facilities Services

70%

Industrial Services

50%

Environmental Services

30%

Construction andEngineering Services

10%Transportation andLogistics Services(10%)

S&P 500

Source: CapIQ

9Industrial and Commercial Services Public Markets Update
Median EV/LTM Revenue
3.3x

3.2x

1.2x

0.7x
Facilities Services

Industrial Services

Environmental Services

1.0x

Construction and Engineering Services Transportation and Logistics Services

Median EV/LTM EBITDA14.9x

15.1x

12.1x

14.0x
8.0x

Facilities Services
Source: CapIQ

Industrial Services

Environmental Services

Construction and Engineering Services Transportation and Logistics Services
10Kroll Qualifications andContacts

Recent Transactions
SELL SIDE M&A ADVISOR

has been acquired byTransaction Overview•About United Service Companies (the “Company” or “United”)••
a portfolio company ofFinancial Adviser to UnitedService Companies•

Fern is a leading exhibition and event service provider, offering a full suite of services that address the complex logistical, marketing andorganizational needs of both event organizers and exhibitors across the United States with headquarters in Cincinnati, Ohio.
Fern services over 1,000 trade shows and corporate events annually across more than 100 cities, including multiple top-100 shows. TheCompany is the #3 provider of trade show and event services nationally and the #1 provider in numerous regional markets.

About Nth Degree•

Financial Adviser to Fern

Kroll’s Diversified Industrial Investment Banking Practice advised Fern on its sale to nth Degree, a portfolio company of MSouth Equity
Partners.

About Fern•a portfolio company ofTFG, a portfolio of Greenbriar Equity Group, is a family of integrated facility maintenance organizations servicing commercial properties
throughout the United States. The companies include local, regional and national brands with proven reputations, in-market knowledge
and operational excellence.

Transaction Overview•

has been acquired byUnited is a highly diversified facility services business providing commercial cleaning, security solutions and other facility support services
throughout the United States. The Company’s specialized service model has cultivated a diverse customer base with long-tenured
relationships creating a highly predictable recurring revenue model.
United has deep-rooted relationships with a diverse base of 600+ active customers across various end markets including hospitality,commercial, aviation and sporting events.

About The Facilities Group (“TFG”)•

SELL SIDE M&A ADVISOR

Kroll’s Diversified Industrial Investment Banking Practice advised United Service Companies on its sale to The Facilities Group, a portfolio
company of Greenbriar Equity Group.

Nth Degree, a portfolio of MSouth Equity Partners, is a leading provider or exhibit management and event services, providing highly
specialized installation and dismantle services for trade shows. Nth Degree also serves as an experiential marketing and management
agency.
12Select Kroll Industrial and Commercial Services Experience
Sell-Side Advisor

Sell-Side Advisor

Capital Raise

Capital Raisea portfolio company ofa portfolio company ofandhas been acquired byhas been acquired byhas been acquired by

Buy-Side Advisor

has received debt financing
froma portfolio company ofhas acquireda portfolio company ofDiversified Services to theMultifamily Residential
Specialty Staffing MarketProvides Contract
Optimization Services toReduce Shipping Costs

Designer and ServiceProvider of Guided Land andRiver Journeys

Provides Residential HVAC
Services, Including Repair,
Maintenance and Installation

Facility ManagementSolutions Provider, Including
ATM/Interactive Teller
Machine Services

Sell-Side Advisor

Sell-Side Advisor

Sell-Side Advisor

Sell-Side Advisor

Sell-Side Advisor

a portfolio company ofa portfolio company ofa portfolio company ofhas been acquired byhas been acquired by

Provides Scheduled
Maintenance and Ground
Installation Services

has been acquired by

Provides New and Used
ATM Machines and Services
to Financial Institutions

has been acquired bya portfolio company ofa portfolio company of

Leader in Brand
Implementation Services,Specializing in Signage

Leading Provider of Critical
Laundry and LinenManagement Solutions

has been acquired byLeading Provider ofSpecialty Cleaning Services
13

For more information, please contact:

Steve Burt
Global Head of M&A
Advisory
Chicago+1 312-697-4620
steve.burt@kroll.com

David Althoff
Global Head of Diversified
Industrials M&A Advisory
Chicago+1 312-697-4625
david.althoff@kroll.com

Jeffrey McNamara
Managing Director, Diversified
Industrials M&A Advisory
Chicago+1 312-697-4638
jeffrey.mcnamara@kroll.com

Jessica Baillargeon
Director, DiversifiedIndustrials M&A Advisory
Denver+1 713-237-5353
jessica.baillargeon@kroll.com

Dr. Howard E. Johnson
Managing Director, Canadian
M&A Advisory
Toronto+1 416-597-4500
howard.johnson@kroll.com

About KrollAs the leading independent provider of risk and financial advisory solutions, Kroll leverages our unique insights, data and technology to help clients stay ahead of complex demands. Kroll’s global team continues the firm’s nearly 100year history of trusted expertise spanning risk, governance, transactions and valuation. Our advanced solutions and intelligence provide clients the foresight they need to create an enduring competitive advantage. At Kroll, our values
define who we are and how we partner with clients and communities. Learn more at www.kroll.com.
M&A advisory, capital raising and secondary market advisory services in the United States are provided by Kroll Securities, LLC (member FINRA/SIPC). M&A advisory, capital raising and secondary market advisory services in the United
Kingdom are provided by Kroll Securities Ltd., which is authorized and regulated by the Financial Conduct Authority (FCA). Valuation Advisory Services in India are provided by Kroll Advisory Private Limited (formerly Duff & Phelps
India Private Limited), under a category 1 merchant banker license issued by the Securities and Exchange Board of India.
The material in this report is for information purposes only and is not intended to be relied upon as financial, accounting, tax, legal or other professional advice. This report does not constitute, and should not be construed as soliciting
or offering any investment or other transaction, identifying securities for you to purchase or offer to purchase, or recommending the acquisition or disposition of any investment. Kroll does not guarantee the accuracy or reliability of any
data provided from third-party resources. Although, we endeavor to provide accurate information from third party sources, there can be no guarantee that such information is accurate as of the date it is received or that it will continue
to be accurate in the future.
© 2024 Kroll, LLC. All rights reserved.

14