The facilities management (FM) market has seen unprecedented change in recent years as major players in the space have consolidated to form larger conglomerates. In particular, mergers and acquisition (M&A) activity proliferated during 2021, with transactions such as the acquisition of ServiceChannel by industrial tech giant Fortive.
According to international investment bank Lincoln International PPC, private equity-backed companies also got into the mix, including Sila Services (Morgan Stanley), Pavement Partners (Shoreline Equity), and Pye-Barker Fire & Safety (Altas), with related acquisitions during Q1 2022.
And while M&A activity slowed overall through H1 2022, the opportunities fueling consolidation in FM remain compelling. The question now is: How will continued consolidation affect the industry? And relatedly: Is bigger always better, and does it lead to better outcomes for business owners and the customers they serve?
The pool of providers offering facilities services has evolved significantly, mainly because the nature of FM itself has changed. Once seen as a purely tactical play, FM has developed into a complex array of services and functions with strategic weight and bottom line impact. As more organizations recognize how FM—specifically, Integrated Facilities Management (IFM)—can create operational efficiencies and organizational opportunities, the more they look to third-party partners for services and strategic support.
Finding the Right Fit for Your Organization
Several entities operating in adjacent markets are increasingly offering FM services to gain new customers or grab existing contracts. Although this approach sounds good on paper, these massive providers tend to be the only ones reaping any benefits. They enjoy additional revenue streams and a more substantial client portfolio, while their customers often suffer from their lack of specialized expertise and more expensive operating models.
Bigger isn’t always better, and going with a company that has recently merged or that’s operating outside of its wheelhouse can have negative consequences for your organization in several areas.
Quality & Control
When you hire someone to provide a service, whether doing your taxes or cutting your lawn, you expect them to do a thorough job. The same goes for retailers seeking FM services—consistent, high-quality performance is at the top of the list of priorities. If this expectation isn’t met, the rest of the engagement is likely to unravel.
Providers that tack FM services onto their existing business offerings typically don’t have the experience or know-how to provide exceptional support. For instance, a company whose services are rooted in real estate is adept at managing tenant leasing activity and handling complaints. However, optimizing an organization’s FM program from the ground up is not typically one of its core competencies. These entities also tend to be heavily staffed, which means you’ll pay more for their services without necessarily benefiting from gains in quality or service.
When seeking an integrated facilities provider, opt for a company specializing in holistic facilities management. The right FM partner will not only understand your business needs, they’ll also understand the nuances of the industry as a whole.
New technologies are changing how many businesses operate, and FM is no exception. Most FM providers offer a tech platform or portal as part of their solution. These offerings can provide value if correctly leveraged; however, technology alone cannot solve your problems—you need human expertise, insight, and context to capture your data’s maximum value.
Look for an FM partner that is just that: a partner. Make sure they will provide not just the technology, but the support, process improvement, and industry edge to elevate your current team’s effectiveness. Also, keep an eye on costs—larger providers tend to charge more to support an inflated infrastructure, and these costs often get passed down to the customer.
Consistency is key for businesses that want to maintain a strong brand presence. Quality or service disruptions ultimately lead to a lack of consistency, which can harm the public’s perception of your brand. To preserve your organization’s identity, your facilities must present a unified image to your customers so they know what to expect when they walk through your doors.
FM providers that are new to the game or have recently merged or acquired another company often have issues with change management. The risk of encountering potential disruption due to internal changes is high as projects switch hands, leadership roles shift, and services slip through the cracks. An experienced FM provider that has specialized in facilities services since its inception will be able to deliver consistent services, with minimal disruption.
The broader business ecosystem has also seen unprecedented change in recent years, with a confluence of events that has accelerated the need to pivot quickly to keep corporate strategy on course. These influences include the coronavirus pandemic, ongoing global supply chain kinks, climate disasters, and geopolitical conflict, to name but a few.
In response, companies now must contend with digital transformation, hybrid workplaces, sustainable solutions, and workforce shortages in ways unimaginable just 30 months ago. Facilities management is at the nexus of organizational systems, facilities, and assets, and must be able to leverage these resources in new ways as our “new normal” continues to emerge.
An IFM provider that can adapt to your evolving needs一scaling up, down, or laterally in real time一is more than just a service vendor. It is a strategic partner that can help your organization move with the times, while staying on track.
Consider a NEST IFM Partnership
It’s no secret that if you want something done right, you should seek the guidance of a trusted expert. Experience and time in the field go a long way in generating results. To get the most out of your next FM partnership, find a vendor such as NEST, with a track record of quality service and skilled expertise who knows what success in the facilities industry looks like一both now and in the future一and how to take you there.