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From fragmentation to value creation: Private equity’s playbook in Business Services

Why the sector is surging—and how Morph can help you stay ahead

Private equity investment is shifting—and business services are at the forefront of this transformation.

In 2024, private equity funds deployed over EUR 6.8 billion across 324 Dutch companies, with business services, alongside telecom, technology, media & construction, accounting for nearly two-thirds of all deal activity. Amid economic uncertainty, investors are doubling down on sectors offering resilience, scalability, and transformational potential.

Business services deliver all three.

At Morph, we see a clear pattern emerging: the firms best positioned for investment are those that combine predictable cash flows with scalability levers—from technology adoption to strategic consolidation. Nowhere is this more evident than in business services.

The structural drivers behind the surge

Private equity’s growing interest is not incidental; it is grounded in several powerful structural tailwinds:

• Recurring revenue and predictable cash flows
  Subscription-based and compliance-driven services provide a buffer against market volatility.
• Fragmented markets
  Fragmentation across subsectors creates natural ground for buy-and-build strategies and platform roll-ups.
• Technology as a force multiplier
  Digitization and automation are enabling margin expansion, operational excellence, and differentiation.
• Talent scarcity
  Scale is becoming a competitive advantage, as firms that can attract and retain talent are better positioned to grow.
• Multiple arbitrage opportunities
  Smaller players can be acquired at attractive valuations and integrated into platforms commanding premium multiples.

Beyond accountancy: Where the next opportunities lie

While the accountancy sector has seen private equity ownership nearly double—from 11% in 2023 to 21% in 2024, with over EUR 800 million invested—the broader landscape for investment is even more compelling.

We see strong momentum across adjacent verticals:

• Legal Tech and specialized law firms
  Investors are backing firms that leverage technology to innovate service delivery and pricing models, especially within niche markets.
• IT Services and cybersecurity
  The shift toward managed services, cloud migration, and cybersecurity for SMEs is creating a rich pipeline of investable opportunities.
• Marketing and digital agencies
  Firms focused on performance marketing, SEO/SEA, or specialized sectors like healthcare and e-commerce are attracting growing investor interest.
• Consulting and engineering firms
  Specialists in sustainability, infrastructure, construction, and Industry 4.0 are emerging as future market leaders.
• HR and recruitment services
  Amid persistent labor shortages, interim management, executive search, and recruitment tech firms are scaling rapidly.
• Facility Management and cleaning services
  These sectors, often overlooked due to traditionally thin margins, now present clear pathways for value creation through operational excellence and consolidation.

How Morph positions you for success

At Morph, we don’t just track these trends—we help you act on them.
Our approach combines deep sector expertise, data-driven commercial insights, and pragmatic execution experience. We partner with private equity investors to deliver:

• Rigorous commercial due diligence
• Strategic market entry and consolidation assessments
• Tailored value creation strategies post-acquisition

In a competitive market where speed, insight, and execution make the difference, Morph is your advantage.

If you are exploring opportunities in business services, let’s start a conversation.