Growing Mergers and Acquisitions Trends in the Community Association Management Industry
Well-funded consolidators are driving a dramatic rise in Mergers and Acquisition (or “M&A”) activity within the Community Association Management Industry. An increasing number of these consolidators are being backed by Private Equity (or “PE”) sponsors, who will partner with a well-positioned operating company and seek to drive growth through acquisitions and other channels. Several adjacent property services-related industries have previously been targeted for consolidation in recent years to the benefit of many business owners in those spaces, including landscaping, HVAC, janitorial services, security and disaster recovery, among others. Why is this happening? Common characteristics that make these industries attractive targets for consolidation and PE firms include:
- They are large markets comprised of many small companies;
- Revenue tends to be highly recurring, which is great for predictability of cash flow; and
- Services provided are generally critical to their customers.
Is consolidation beneficial to the industry? Industry consolidations have historically brought business owners in targeted industries the opportunity for life-changing financial outcomes because of industry-wide growth in valuation multiples driven by increased demand for acquisitions. Many of these business owners have further amplified their success by partnering with the acquirers and retaining a portion of their equity post-transaction for a “second bite of the apple” when the consolidators ultimately exit their investment.
For more information on this transaction, contact Thomas A. Hill, Managing Director, at 610.478.2034, R. Patrick Wood, Senior Vice President, at 717.255.7383, or Jeff R. Tallman, Associate, at 610.205.6013.
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