Headlines: June 29th, 2012

Private sector business support services are playing an increasing role in the public sector as budget cuts bite.

The Smart Money study looking into the UK business support services market such as outsourcing, consulting and advisory services, operational support, logistics and facilities management, found that with investment deals of £1.7b in the first quarter of this year, the total for 2012 could be double that of 2011. The Study is published by Grant Thornton the business and financial adviser.

According to the study, public sector bodies are partnering with support services firms to deliver non-core operations, so that they can concentrate on delivering high quality, frontline public services. Based on respondents’ feedback, 43 per cent identified health and 30 cent identified central government as the most attractive areas for investment in the public sector.

Business process outsourcing is cited as the most attractive support service subsector for investment at 83 per cent, followed by operational support and consulting and advisory firms, both at 48 per cent each. Public sector reforms are also creating opportunities for support services companies.

David Ascott, partner, corporate finance, Grant Thornton, said: “While the sector is growing, the value drivers are still the same, with buy-and-build and recurring revenue streams key areas which investors are focusing on. The search for growth is also leading to investment in support service firms in areas facing legal and regulatory change.”