Insight

Home Services Sector Update

Read more about M&A activity in this sector

Stephen Guy

Stephen Guy

Managing Director, KPMG Corporate Finance LLC

+1 410-949-8909

Home Services Sector Overview

Home services participants include providers of various residential services and solutions, as well as property and facility maintenance services delivered directly or through a network of franchisees. Key players in each sub-sector are categorized as to whether they operate through a franchise model

Sub-sector Public Revenue / EBITDA Multiple1 Description Key Select Industry Leadership
Franchise Home Services 4.30x / 25.3x Includes companies offering home based services directly or through their franchise network. These services entail pest and termite control, remediation, HVAC, exterior and interior home maintenance, landscaping, commercial property management, and in-home healthcare
  • FirstService
  • Rollins
  • Chemed
  • Terminix Global 
Non-Franchise Home Services 2.62x / 14.2x Comprised of companies offering interior and exterior building products, insulation, home improvement and repair, security solutions, installations, and related services
  • Fortune Brands Home & Security
  • ADT
  • TopBuild
  • Installed Building Products
  • HomeServe
  • Frontdoo

 

Sector Perspectives

Increased consumer spending on home remodeling and home maintenance services has resulted in a 17% increase in market expansion

Home Services Remain an Attractive Sector for Financial Sponsors

  • Recurring revenue model through contractual or subscription based service offerings such as HVAC, interior and exterior cleaning, and landscaping
  • Favorable, long term demographic trends support growth and drive demand
    • Growing home ownership, low interest rate environment and increased discretionary income
    • Aging population as more baby boomers reach retirement age
  • Industry revenue and demand have remained strong throughout the Covid-19 environment
    • Increased demand for essential services such as pest control and landscaping
    • Consumers are spending more time at home and are more conscious of services available for their homes
  • Younger homeowners are more willing to use thirdparty service providers
  • Fragmented sub and micro sectors are favorable for increased consolidation

The Home Services Industry is a $595B Market Poised for Significant Growth

  • Improvement Services continues to garner the largest share (63%) of the Home Services Industry

Source: Market statistics sourced from S&P Capital IQ and based on 12/31/2021, Angi

Home Services Public Markets Update

  • Sub-segment indices varied in performance in 2021 relative to the S&P 500
    • Franchise Home Services (+6.0%) lagged the S&P 500 (+26.9%)
    • Non-Franchise Home Services outperformed the performance of the S&P 500 (+30.6%)
  • As of December 31, 2021, the mean EV/LTM EBITDA multiples for Franchise Home Services and NonFranchise Home were 25.3x and 14.2x, respectively


Indexed Stock Performance (1/1/2021 through 12/31/2021)


 


 

 

Financial Metrics2 for Franchise & Non-Franchise Home Services Peer Groups (12/31/2021)

LTM Gross Margin

LTM EBITDA Margin

EV/LTM Revenue

EV/LTM EBITDA


Source: Market statistics sourced from S&P Capital IQ

Footnotes

  1. Valuation Multiples represent Enterprise Value to LTM Revenue and LTM EBITDA at 9/30/2021
  2. Financial metrics represent the average of constituents reporting in category


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