Q1 was possibly artificially inflated with Kiers acquisition of Mouchel which has been the largest transaction seen in the sector since the private equity-backed buyout of Keepmoat in Q3 2014.
The slow down has been driven mainly by lower activity among international buyers following uncertainty in the UK market post July budget and the concerns regarding the potential impact of the increasing minimum wage. Large contractors are already confirming that increased labour costs will wipe out significant profits from their bottom line and that share prices have already seen a significant drop.
With this underlying level of uncertainty surrounding profits outlook, M&A activity is unlikely to pick up as clients need stability. Other evidence reveals that whilst most clients appear to trust the relationships they have built up with their contractor and are prepared to give them the space to watch how things progress, they are now quicker to consider re-tendering if standards slip; so the emphasis on people performance and delivery is key.
Unfortunately as an industry sector, whilst offering a wealth of career opportunities; people tend to fall into the FM profession rather than choosing it and with the impending retirement of baby boomers, the industry will be faced with severe talent shortage at middle and senior management level. Some key players are aware of the cost to the business and the importance of preparing a talent funnel.
In response to this Macallam have developed a fully integrated recruitment solution to assist clients in becoming an “employer of choice”.
For further information please call 01423 704154 or email enquiries@macallam.com
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