Shaw & Co, the specialist corporate finance advisory firm, has launched the ninth in a series of 12 in-depth sector reports that offer an industry’s SME business leaders a powerful benchmarking tool to aid their decision making.

The ninth report covers the Professional Services marketplace and segments over 1400 businesses with earnings in excess of £1m by size and subsector to track their performance, profitability, debt levels and M&A activity.

The report’s key findings include:

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A Resilient Industry:

Professional Services businesses have weathered the Covid lockdowns well, adapting to new technologies to service clients throughout the pandemic. All sub-sectors within the Professional Services industry have seen an increase in average Ebitda margin regardless of company size. In other words, most businesses have been able to maintain their top line whilst reducing costs.

Headroom to Borrow:

SMEs in the industry generally have plentiful debt capacity to pursue organic or acquisitive growth and valuable economies of scale. Relative to other industries, we see Professional Services as lowly levered with further capacity remaining should business owners require funding. Businesses across the Professional Services industry have plenty of funding capacity to execute growth, acquisition or even buy-and-build strategies, and there are numerous lending options for ambitious SMEs.

167 M&A Deals:

Deal activity has been buoyant in the last year but headwinds are emerging including rising inflation and the worsening geopolitical situation. Professional Services is a strong sector in the UK economy and once a business reaches sufficient scale to make a difference to the bigger players in the sector, it is likely to come onto the radar as a potential acquisition target.

83% UK Buyers:

The majority of buyers of Professional Services businesses in the past year came from the UK. There have been a significant number of deals across the legal and accounting sub-sectors, while there are likely to be a series of recruitment deals lining up as that sub-sector has been relatively quiet.

A full copy of the report is available for free download here.