Business Services

Business services firms sell brainpower, labour and execution, not products - capital-efficient, but harder to diligence because assets walk out the door each evening. Six sub-sectors matter: consulting, staffing, facilities management, BPO, TIC (testing, inspection, certification), and government services. Productivity is measured by revenue per FTE (consulting $300–500k, staffing $100–200k, FM $80–150k) and utilisation - billable hours as a share of available hours, typically 70–95%. The fundamental unit economics is bill rate minus pay rate spread, which must cover overhead and profit. Margins vary sharply. Staffing runs razor-thin at 3–6% EBITDA. Consulting and TIC reach 12–22%. Retainer revenue trades at two to three times the multiple of time-and-materials work, because it's recurring and predictable. Watch the cash. People-based businesses aren't asset-heavy but they aren't cash-light. Staffing especially: workers paid weekly, clients billed monthly, cash collected in 30–45 days. Growth eats working capital. Roll-up platforms scale through bolt-on acquisitions, driving overhead down as revenue grows - a $50M firm at 50% overhead ratio can hit 12% at $500M. That's the flywheel. AI threatens staffing and basic BPO hardest; TIC and hard FM least. Multiples range from 5–7x for temp agencies up to 14–20x for TIC. Watch revenue mix and organic growth - same-store beats acquisition-driven every time.

Sector coverage · from the G2G library

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