The professional services industry includes industries which offer specialization in a specific discipline e.g. accountants, legal attorneys, certified business intermediaries, consultants, brokers, architects, engineers. Practitioners in this industry are trained in their discipline and often require a legal license to be able to practice. The professional services industry is in its mature phase and faces moderate regulation. The industry primarily depends on the overall business environment and corporate profits. The legal industry has witnessed high consolidation and major players have been merging to form global powerhouses and serve international markets. Major accounting, consulting and financial firms have been using more sophisticated software and technology to streamline their core operations and reduce overhead. Going forward strong corporate profits and consolidation will continue to generate demand for professional services. The Canadian real estate market is expected to undergo a correction and as a result, services in the real estate industry will experience a minor slow down. We also continue to see a minor decline in the number of sole practitioners as opposed to small and medium sized firms.
Macroeconomic Factors – Professional services are impacted by the status of the economy, specifically factors including unemployment, interest rate, consumer expenditure and changes in business regulations and taxes. During a strong economy, membership and revenues tend to increase with growth in professionals’ and businesses’ disposable income, and vice versa.
Industry Consolidation – Businesses in this industry often merge to survive. Mergers allow organizations with similar objectives to pool resources, maintain a viable membership base, and take advantage of economies of scale.
Technological Innovations – While companies in this industry used to rely on traditional service delivery methods, technological innovations such as management software have made service delivery and business operations more efficient. Businesses must adapt to these industry megatrends and take advantage of efficient business processes.
Selling a Professional Services Company
With frequent consolidations occurring, the professional service industry sees a high volume of M&A activities. As Canada’s leading private market M&A Advisory firm, Beacon understands that selling a business is an important decision. A dedicated business owner not only seeks to extract maximum value from the sale of a business but also seeks to sell the business to a competent buyer who can continue the company’s legacy. Beacon has worked on valuation and M&A advisory mandates in the entertainment industry, bringing extensive experience in deal negotiation to the table. Our experienced advisory team will assist your business in navigating the entire sell-side M&A process.
As an entrepreneur or business owner who is exploring a potential sale, it is important to understand some key factors specific to the professional services industry that might impact the likelihood of a potential sale. These are factors that determine business attractiveness for potential buyers and investors.
Niche Service Offerings – Due to the high volume of companies in this industry, businesses that differentiate themselves through niche service offerings can provide more values to both customers and potential buyers.
Geographic Markets – Some professional services are deeply rooted in their geographic markets and have a regional advantage. They often have strong brand recognition, as well as well-established client and supplier relationships within the area. Businesses looking to expand into other geographic markets can consider M&A opportunities with these companies.
Experienced Professionals – A skilled, experienced team that can deliver high quality services and meet client expectations is a key distinguishing factor for a business in the professional services industry. Key personnel and strong management teams are also integral to the health of a professional services business.
With 140 years of combined experience serving businesses within Toronto, Ontario, and abroad, the Beacon transaction team has extensive knowledge and experience successfully working for several professional service companies from a variety of industries. Whether it be a valuation or sale, our team can provide expertise and resources found only at larger corporations, paired with the personalized touch of our M&A Advisory team. Contact us today to get in touch with one of our advisors.