Developing Facilities
Management in a Rapidly
Changing Business
Environment
Strategic , Operational
and Financial pointers to
best practice in the
Planning and Management
of Facilities
Sept. 2014

Section Topic
I What Is Facility Management?
II Planning for Facility Management
III The Design of the Work Place
IV The Delivery of FM Services
V Building Operation and Maintenance
VI FM Contract Management
VII Measuring Performance (KPI’s)
VIII Technology for FM
IX FM Evolving Markets
X FM Valuations & Stock Price
XI Facility Management M&A
XII Prospects of the FM Industry

The Facility Management Industry
• The profession of facilities management now occupies a
prominent position in the real estate sector. This has much
to do with the excellent work of the FM organizations,
particularly BIFM, FMA, FMA Australia, Global FM, IFMA, and
RICS Facilities Management Group.
• Facilities management sector is populated by a wide range
of professionals from a variety of different backgrounds,
many of whom have come to the profession with experience
in the construction and servicing of buildings.
• What is required of facilities managers is much more than
technical skills – it is to understand the productivity effects
of working environments on occupiers, work style
flexibility, computing and mobile technologies, strategic
business planning and, sometimes, the value and
marketability of the facilities being managed.

Official Magazine of BIFM
The digital Magazine for FM Industry

Some FM Organizations
RICS - FMG Royal Institute of Chartered Surveyers – FM Group
BIFM British Institute of Facilities Management
CIBSE Chartered Institution of Building Services Engineers
CIPS Chartered Institute of Purchasing and Supply
Euro FM A Europe-wide alliance of FM organization’s
FMA Facility Management Association of Australia
FMA Facilities Management Association
Global FM worldwide facility management organization’s
HefmA The Health Estates Facilities Management Association
IFMA International Facility Management Association
CSSA Cleaning & Support Services Association

So what is FM?
There is little unanimity about the definition of facilities
management as it can be viewed from different perspectives. RICS
Definition;
“The effective management of place and space, integrating an
organization’s support infrastructure to deliver services to staff and
customers at best value whilst enhancing organizational
performance”.
So facilities management operations will:
• Provide flexible, well maintained and serviced accommodation
and supportive technology
• Enhance customer experience and enable the efficient delivery of
products and services; and
• Enhance the organization’s brands, image and financial
performance.

Core of Facilities Management?

Importance of Facility Management
• The majority of organizations operate from buildings, which
represent one of their largest corporate assets and after staff, one
of the largest cost liabilities. These assets and liabilities need to
be managed with the objectives of the organization in mind, so
that accommodation and facilities services strategies are aligned
with business strategies and plans.
• Many operational managers fail to realize the advantages of this
alignment and this can be an expensive oversight, almost certainly
resulting in increased costs, with reduced productivity and a loss
of competitive advantage.
• On the other hand; the facilities management industry needs to
dispel the impression that facilities contracts are all about
minimum price, delivering minimally acceptable quality services
and meeting delivery targets.
• The future for the sector depends largely upon a shift of focus to
quality, fair price and a core business enhancing service to its
customers.

Core Competencies in FM
• Building And Workplace Management – building
maintenance and performance, environmental services,
workspace design and management, technology and
communications (ICT)
• Financial Management – accounting, purchasing and supply,
budgets, business cases
• Service Delivery – account/customer relationship
management, delivery process and systems, contracts,
performance metrics
• Compliance – legal and regulatory requirements, in
particular for the health and safety of users of buildings and
staff; and
• General Management – communication, leadership,
strategy, change management, procurement and risk
management.

The Right Organizational FM Culture
• The culture and attitude of an organization towards
facilities management is a significant factor in the delivery
of a successful facilities service.
• To be optimally effective, the facilities function should be
recognized and supported by management as a service
which will enhance organizational performance.
• Only then will fully aligned facilities and business plans be
produced and the necessary dialogue take place about
upcoming operational changes which will need the support
of the facilities team.
• REMEMBER; the quality of service experienced by
customers depends largely on the capabilities and training
of the people delivering the service, no matter how good the
process and management behind the scenes. So, it is vitally
important to source the right people and to train them in a
service culture. FM Service Innovation is the second most
important!!

Importance of the Human Element
Disney Service Model
Smile
Make Eye contact
Respect and welcome all
Value the magic
Initiate guest contact
Creative service solutions
End with a “thank you”
Deadly Sins of Service
- Apathy (no passion)
- Brush-off (To ignore ,..)
- Coldness
- Condescension (disrespect)
- Robotics
- Rule book
- Runaround (evasive)

Importance of Innovation

Facility Team Organizational Location
• Of great importance is the correct placement of the facilities team in
the corporate structure, enabling the establishment and maintenance
of communication links to all parts of the business.
• For facilities managers the focus is on both the built and virtual
workplace but the balance is ever-changing and supporting the
increasingly mobile workforce means an essential partnership
between FM, IT and HR managers in order to support staff as, when and
where they work.
The ‘client side’ facilities manager
The client side or in-house facilities manager is a key member of the
central business support management team. This ensures that the team is
directly aware of the business strategies being followed and the FM
services required by each part of the organization.
The ‘supply side’ facilities manager
The supply side facilities manager has a dual role of delivering designated
services to the client while also managing the service company’s ‘bottom
line’ to best corporate advantage. Markedly different skills are required
for each role.

Organizational FM Performance
In order to enhance the organizational performance, the facilities team
needs;
• To have good links with, or be a member of, the strategy forming group
to understand fully the aims and objectives of the whole organization
including those of the individual business units.
• To be led by a respected facilities manager who has access to all
operational business units
• A mechanism to ‘unload’ day to day activity to a service provider, so
that strategic, corporate focused activities can continue unhindered
• A link to financial planning so that project business cases can be
‘tested’ and performance metrics and benchmarking objectively
carried through
• A good dialogue with the core support teams and, ideally, an agreement
that the facilities manager will take a lead role in organization-wide
projects; and
• The support of the finance and operational teams when the annual
planning and budget discussions take place, to ensure mutually
supportive strategies and operational plans are developed.

What Facilities Managers Do? - Services
• Catering, Hospitality, Cafe
• Cleaning, Internal and external, Pest control
• Documents, Copying, Archiving, Printing, Scanning, Shredding
• Front of House, Concierge, Conferencing, Help desk,
Reception, Switchboard
• Logistics, Vehicles, Consumable supplies
• Maintenance, Fabric, Landscaping
• M&E, Air con., Fire alarms, Lifts, Lighting, UPS systems
• Security, Access control, Alarms, CCTV, Asset tagging,
Information security, Security sweeps
• Staff welfare, Crèche, Gym, Medical Centre, Sports facilities,
Staff shop
• Telecoms, Mobiles
• Utility supplies, Water treatment
• Waste management
• Workplace, Space allocation, Churn, desk

What Facilities Managers Do?-Management
• Administration, Asset registers, records, archives
• Business continuity, Disaster recovery, Crisis management
• Compliance, Accreditation, Legislation, Policy, Regulation
• Contract Management, Specification, Tenders, Project management
• Corporate Social Responsibility, Energy, Carbon, Waste, Work-life balance,
Sustainability
• Customers, Relationship management, Complaint handling
• Finance, Accounts, Budgets, Business cases
• FM Team, Management, Training, Recruitment
• ICT, BMS, Cable management, CAD, CAFM
• Networking, linkage with internal & external customers
• Performance management, Staff surveys, Benchmarking
• Procurement, Services, Utilities, Supplies
• Risk, Business continuity, Environmental, Health and Safety, Insurance
• Strategy, Business plan, FM vision, Mission & Objectives
• Workplace, Design, Work style, Flexible working, Furniture

What Facilities Managers Do? - Real estate
• Occupational and Financial Strategy
• Asset Strategy and Management
• Transactions
• Capital Projects
• Business Agility
• Leasehold Management
• Operating Cost Management

Space Utilization

Space and Services Policies and Plans
The space strategy is a high level statement of the overall
approach to providing accommodation to meet the organization’s
needs. The benefits of establishing a space and facilities services
policy include:
• The efficient allocation and management of space across the
organization
• Optimum locations for service delivery
• Increasingly sustainable delivery strategies; and
• The lowering of operating costs and efficient use of capital
Once the space policy is developed, work to develop the
organization’s space and facilities services plan can proceed.
The facilities management team should be part of this planning
process to ensure what is proposed can be maintained, serviced
and cleaned in an efficient and effective manner and complies
with health and safety and other relevant legislation.

Briefing for Office Accommodation
• Business - Corporate culture – image, operation, style, quality, sustainability. Will the
design and use be a branding opportunity and if so what image is to be portrayed? The
balance must be right – not too flashy, but not too ‘ordinary’.
• Building - Quality and style, environmental standards, flexibility in use, condition and
maintainability. How many people can be accommodated? What are the timescales and
numbers of people in the business over the strategy period? How will the building be
serviced, security maintained, and services provided, and are there design problems
which need resolution? Are there security issues locally which affect design and access
arrangements? Does the building comply with all present legislation? What is the BREEAM
rating and what can be done (at what cost) to improve its ‘efficiency in use’. Will the
building will be rated from an energy efficiency perspective?, what will its compliance be
with the occupier’s sustainability policies?, etc.
• Work Space - Numbers to be accommodated and type/quality/space/ environmental
requirements. Circulation space, furniture and equipment, IT services, space standards,
flexibility of space and use, meeting room and quiet room space. Communal and
networking spaces at group, departmental or corporate level. What work group
adjacencies are required? Catering and welfare services – will child-care be
required/provided?
• Work Style - Flexibility of work delivery, desk sharing, breakout space, video conferencing,
‘bring your own device’, paperless office, VOIP technologies, anytime, anyplace policies.
• Staff - Do I want to work here – what is needed to get me to work here? Space, furniture,
welfare facilities and standards, catering, location, parking, public transport, local
shopping and other amenities. Is this location safe? Can I afford to work here – expense of
travel, parking, shopping, etc.?

REMEMBER; FACILITY Location!
• At the onset, the location security and
occupational protection should be considered
when occupiers are in the process of assessing the
suitability of a building for their operations, these
include;
• Adjacencies, neighboring or sharing occupiers,
stand-off areas, the district and its
communications, utility supply diversity and
other vulnerabilities.
• The specification, quality and durability of the
structure as environmental factor like
temperature, ventilation, air quality, humidity,
acoustics and lighting levels have a direct and
measurable effect on the wellbeing and
performance of office occupiers.

1. PURPOSE AND BENEFITS - ACCOMMODATION AND SERVICES STRATEGY & PLAN
2. THE ORGANIZATION’S CORPORATE VISION, MISSION AND STRATEGY
3. THE FINANCIAL CONTEXT
4. ACCOMMODATION & SERVICES – A STATEMENT OF GOALS & OBJECTIVES
5. THE ACCOMMODATION AND SERVICES PLAN FOR EACH BUSINESS UNIT
6. ASSET UPGRADE ANALYSIS
7. DEFINITION OF SERVICE LEVELS TO BE EXPECTED
8. CRITICAL SUCCESS FACTORS
9. RESOURCE IMPLICATION OF THE PLAN
10.PERFORMANCE MEASUREMENT
11.ORGANIZATIONAL STRUCTURE
12.ACTION MILESTONES
13.REVIEW
14.RISK
15.ASSUMPTIONS AND PROVISIONS

Purpose And Benefits
• The purpose of the accommodation and services strategy and plan
and the benefits to the organization.
• How the strategy has been developed, the alignment with business
strategies.
• The plan timescale. There may be more than one end date where a
number of change programs are running simultaneously.
The Organization’s Vision, Mission And Strategy
• A statement of the organization’s goals and objectives and the
implication for accommodation.
The Financial Context
• The overall corporate financial position.
• The financial outlook and the implications for accommodation
and services decision-making.
• An estimate of the budget for accommodation change and
ultimate operating and servicing costs.

A Statement Of Goals & Objectives
• Setting out at corporate level the policy, goals and objectives that will
improve delivery.
• The corporate approach to the use of accommodation and the quality
of facilities services.
• The vision of what accommodation will ‘look like’ through the
program and at the end of the plan period. A statement of the quality
of space and the standard of services is expected.
• The sustainability elements of the plan and the changes made to
increase the ‘sustainable focuses.
The Accommodation And Services Plan For Each Business Unit
• A business unit analysis of the effect of the plan on the
accommodation portfolio.
• The effect on key locations to be highlighted. This charts the change
process to align with business requirements.
• In separate appendices, a location by location breakdown to show
the detail of each asset and any proposed changes, as well as the type
of services planned and the estimated capital and operating costs.

Asset Upgrade Analysis
• At high level, the key changes required to deliver the plan and the
facility service changes proposed.
• An estimate of the likely total costs of the plan’s proposed capital
requirement.
• Accommodation and services – A statement of goals and objectives
Definition Of Service Levels To Be Expected
• The quality, capacity, reliability, services and responsiveness of the
accommodation is confirmed and priced. This will be a balance
between affordability, practicality and service quality;
• The level is defined and becomes the baseline for performance
measurement.
• Operating models and resultant changes in inputs and outputs.
Critical Success Factors
• Business based outcomes and timescales are noted.
• This will form the basis for performance management.

Resource Implication Of The Plan
• The effect on accommodation and services as well as finance, IT and HR to be
noted and this provides further input to the capital and operating plans.
• Revenue budget implications will be outlined.
• The broad investment and divestment plan will be outlined, capitals spend
and returns to be estimated.
• The overall approach to sourcing, outsourcing and procurement to be set out
as a strategy to be investigated.
Performance Measurement
• The agreed performance measures to be used relating to the critical success
factors and those of all business units across the organization.
• The performance measurement system.
• Current performance as a base measure and the anticipated performance
review steps as the plan proceeds.
Organizational Structure
• The senior corporate manager responsible for space and services is identified
along with the real estate and facilities structure, roles and responsibilities.
• Process for overall space and services structure reviews.
• Governance and decision taking.
• Data management.
• Resourcing allocations and capacity management.

Action Milestones
• Actions which will be taken over the next 12 months and a timetable agreed
for organizational, accommodation and delivery service changes.
Review
• The success of the accommodation and services plan is measured by the
reaction of customers to service delivery and the effect on operating costs.
• Reviews against pre-agreed performance metrics to take place regularly and
recommendations made about changes to enhance delivery to customers, as
well as improvements in facilities services.
Risk
• An assessment of the risks associated with the accommodation and services
plan.
• A risk assessment of other resource inputs including financial/budgetary
cutbacks and shortage of real estate and/or facilities management expertise,
along with the management of all shortfalls.
• Business continuity plans.
Assumptions And Provisions
• The plan will state the base assumptions and any provisos about data
integrity, cost estimates, demand forecasts, real estate and services lifespan,
and other variables.

Office Layout
The adoption of generic open plan office layouts, with even
the best workstations and with state of the art technology
will not suit every worker. Knowledge workers require a
number of different working modes (settings) in order to
achieve optimum productivity. These are identified as:
• Socializing Work - Team building, corporate identity
reinforcement with group delivery of tasks ‘stamped’ with
group brand
• Collaborative Work - Delivery by working with others, face
to face or via video links
• Learning and Innovation - Learning from the team and
using group power to develop and innovate
• Individual Focus Work - Individual, task oriented, work
delivery

Notes on the Design of the Workplace
• The agility required in most organization’s to bring new
products and services to market makes a swift response to
workspace layout changes of great importance and an
opportunity to gain competitive advantage.
• The key to the mobility and productivity for staff is network
connectivity for any device and bandwidth availability to
support. The adoption of wireless networks in and around
physical workplaces adds greatly to employee mobility and
connectivity.
• The variability of numbers in the workplace and the
unpredictability of when staff will be occupying desk space
makes the sizing of office space a difficult task.
• The use of sensing devices to register occupation densities
enables calibration of BAS for energy savings and the frequency
of unoccupied office space which may allow release of floor
space, thereby saving on overall accommodation costs.

FM Capability Assessment
• A decision is made on whether the required facilities
management services are likely to be most efficiently provided
by in-house resources or through any ‘mix’ of in-house and out-
of-house provision up to a total outsourcing solution.
• An objective assessment of the capabilities of the in-house team
should be carried out as well as a financial analysis of the direct
and indirect costs of the various delivery options, so that a
decision can be taken on the best value option for the
organization.
The sourcing of facilities services delivery depends on a large
number of circumstances. It may be based on the
• Capabilities of the in-house team,
• Uniqueness of the services required,
• A particular or unusual speed of response requirement,
• On the question of overall control or
• On the direct and indirect cost of service supply.

Sourcing Options
In-house The present facilities team, possibly augmented by agency or full-
time staff, runs the delivery of services.
In-house with sub-
contracting specialists
The in-house facilities team, with limited resources, will run some
services but will contract with external service providers to cover
any skill or resourcing gaps.
Establishing a
business unit
The present facilities team is re-constituted as a separate, free
standing services organization, providing services to their
organization and with the objective of gaining contracts from other
clients.
Managing agent In the absence of a sufficiently experienced or qualified facilities
team/manager, the appointment of a specialist FM professional to
act as the facilities advisor and informed client. This specialist will
appoint and manage external suppliers.
Contractor/ manager The appointment of an organization to manage all services
providers. The appointee is paid a management fee. In some
circumstances the appointee is responsible for managing the
facilities budget and the payment of all subcontractors.
Total FM Total facilities management contracts with a single supplier, taking
responsibility to provide all required services.

Notes on IN-HOUSE Versus FM Outsourcing
• The in-house team will be familiar with and understand the
organization’s operational strategies and different business unit
operating imperatives, however
• An external supplier might bring innovation and efficiencies that
are beyond the scope of the existing team. They will also be more
familiar with procedures for help desk, customer relationship
management and the handling of change requests.
• On the other hand, outsourcing the facilities function will mean a
very fundamental change and a possible transfer of staff to an
external supplier.
• In situations that require specialized servicing, as in, health care,
IT, utility or transport such as maintaining the environment and
utility supply, security in a data center or acute medical wards
require critical environment management (CEM), calling for
specialist staff (and training). It is often the case that such
facilities service management is retained in-house because it is
crucial to the business.
• In-house service provision can continue only if it achieves
customer satisfaction and best business value to the organization.

Sustainable Property
Sustainability and environmental management are important operational
criteria for all organization’s and directly affect the corporate social
responsibility (CSR) measures which most businesses report on to
investors.
The main issues relating to buildings and impacting on facilities managers
are:
• Energy Sources – buying from renewable sources
• Energy Usage Reduction - through more efficient heating, lighting and
insulation, and building control mechanisms
• Construction Materials – buying materials from renewable sources and
evaluating materials on the basis of their embodied energy
characteristics
• Water – recycling and rain water capture
• Waste Management – separation and recycling; and
• Pollution – more efficient boilers and vehicles.
The most effective way to improve environmental performance is to reduce
the amount of space occupied. Mixture of real estate, fit-out, distributed
workplace and flexible work style strategies will bring reductions in the
amount of office floor-space required and at the same time cut the amount
of travel by staff to and from office centers.

Building Maintenance
• The increasing complexity of buildings and sophistication
of plant, machinery and controls means that operation and
maintenance manuals are essential information for the
facilities management team. For new buildings, the
developer’s architect should provide this manual to the
owner.
• These manuals define the procedures to efficiently operate
and maintain buildings and will include detail about the
structural specification, mechanical and electrical systems,
air conditioning and heating and all other plant and
control items, as well as the utility supply capacities and
locations. The document should be available both
electronically for multiple and remote access and in ‘hard
copy’ at the building.

Operating and Maintenance Manual
Part 1 - Introduction Contents, use of the manual, emergency information, contacts listing,
contractual and service information, utilities suppliers and contacts.
Part 2 - Health and
safety
Confirmation of the legislation applicable. Risk assessments. Waste
disposal information.
Part 3 - Building
description
Overall description of the building with outline design and construction
parameters.
Part 4 - Operating
procedures
Overview of procedures for operating the building with BMS explanation
and set down procedures. Routine inspections. Fault finding and
remedial actions. Emergency procedures.
Part 5 - Manufacturer’s
full listing
Full asset register including a complete plant listing, with plant serial
numbers linked to supplier information ‘addresses’, including contact
listings. Spares listings.
Part 6 - Maintenance
regime
Maintenance procedures for the building and M&E equipment and other
mechanical plant. Links to manufacturers’ handbooks/information and
to supplier care contacts. Regular maintenance task program listing.
Part 7 Full commissioning and certification data.
Part 8 Full sets of as built drawings.

Business Continuity Planning
• Business Continuity Management (BCM) is the
process by which an organization plans to deal with
emergency incidents which might otherwise prevent
it from achieving its operational objectives.
• The purpose of the BCM process is the identification
of potentially disruptive incidents and the planning
of measures to reduce the likely impact. BCM should
be implemented in all organizations as a
management system.
• A key step in the planning is the preparation of the
Business Impact Analysis (BIA), which determines
recovery priorities based on an assessment of the
effect on the organization of the cessation of one or
more of its operations.

Business Continuity Plan Template
Process Content and actions
Preparation of an Incident
Response Schedule
Consisting of notification and escalation arrangements, outline
procedures for dealing with the most common incidents, contact and
check lists.
Business Impact Analysis
(BIA)
The BIA will determine priorities for recovery and recovery objectives
based on likely impacts of a cessation of all or some operations over
varying timescales.
BCM strategies Analysis of a range of recovery strategies taking account of pre-existing
resilience and the importance of different products and services in
priority for restoration.
Recovery procedures The plan made up of the emergency response, incident management
and recovery processes.
Continuing processes Plan testing, maintenance, audit and reviews on a regular sequence to
ensure the plan remains relevant and up to date.
BCM becomes a normal
business process
Education of all staff and senior management team as well as
suppliers, and as necessary, customers.

Business Impact Analysis (BIA)
• Identification of operations which support key products and services
• Assessing the impact over time of stopping any one operation
• Estimating the maximum allowable period of disruption after which the
organization’s viability is threatened.
• Determining the maximum period within which ceased activities must
be resumed
• Establishing the time required to resume all normal operational levels
• Prioritizing of recovery plans to focus on critical activities and services;
• Identifying imperatives / external resources to enable recovery of
priorities
Some of the areas that can be checked include; network and system
resilience, cyber espionage and server security, power security and an
overall systems risk analysis. Emergencies can include; loss of power, loss
of a building, failure of the ICT system, etc.
The FM team should prepare plans in great detail to ensure that they know
exactly what is expected of each facilities team member from replacement
accommodation, ICT set up, replacement furniture, stock, equipment, and
temporary catering, as well as, plans to transport staff to replacement
locations.

Implementation of BCP
• THE INITIAL RESPONSE (The Emergency Phase) - Deals with the
immediate actions taken to limit damage and/or safeguard life.
The responses relies on the initial incident response schedule of
key contacts and the contact ‘tree’ which will run through the
BCP.
• CONSOLIDATION (Incident Management Phase) - Concerned
with limiting organizational damage, managing business impact
and planning for recovery
• RECOVERY PHASES - The capability to recover by allocating
resources and restoring an acceptable level of service
• COMMUNICATION (Done Throughout) – Announcements are
made as soon as the emergency occurs, followed by regular
updates to ensure awareness of the emergency and the plans to
return to normality. The messages are communicated by senior
managers to principal customers and down the management
line to other customers and suppliers and staff.

AACS Automated access control systems
AEC Architecture, engineering and construction
CTM Counter terrorism measures
DCFM Data center facilities management
IDS Intruder detection system
PIDS Perimeter intruder detection system
UPS Uninterrupted power supply system
Common Terminology in BCP / FM

Information and Data Management
Facilities management information and data handling systems are changing
the way buildings and accommodation are designed and managed. Facilities
management information systems provide the FM team with two main
information flows.
• The First, relates to the day to day management of the accommodation
and associated assets, which enable the ‘in the field’ teams to carry out
their tasks.
• The Second, provides analytical information to regularly report progress
on the management of the accommodation portfolio.
The management information system generates reports on at least two
levels:
• HIGH LEVEL REPORTS - for senior managers demonstrating the added
value to the business of the facilities management operation relating to
the objectives of the organization and highlighting where FM has added
value.
• OPERATIONAL REPORTS - comparing performance against agreed budget,
performance targets and showing occupier feedback relating to
satisfaction with services delivery.
The reporting provides performance trends over time or in the case of
external providers of services, during the life of their contract to give the
client and occupier a view of supplier performance.

Service Levels Agreements
Service specifications and service level agreements [SLAs] are essential
documents in the management of facilities. They set the output-driven
guidelines for customers and service providers and are used whether the
services are supplied in-house or by external service providers. These
documents establish:
• The essential customer service requirements and minimum
acceptable standards
• The service quality and performance (the outputs) expected by the
customer
• Performance measures for the services; and
• The agreement for the supply and acceptance of the services.
• Conformance with legislative and regulatory framework
• Effective maintenance programs help to ensure a safe working
environment.
Regular forum meetings should enable the FM team, suppliers and
customers (occupiers) to decide if new outsourcing arrangements should
be tested and/or whether the supply contracts should be re-tendered.

Legislative and Regulatory Framework
It is essential for the facilities team whether in-house or external suppliers
to be aware of and be fully conversant with all current local regulations
and regulatory regimes which governs the operation of real estate and the
employment of staff in each of their operational regions and countries
like;
• Health and safety regulations of staff, visitors and customers
• Employment, equality, waste disposal,
• Anti-bribery and money laundering
• Construction / fit-out related issues like;
• Hazardous materials such as asbestos
• Pathogenic like airborne bacteria (Legionella),
• hazardous dust created during fit-out works
• Fire safety, evacuation plans, etc.
• Emergency exits, emergency lighting, etc.
Regular reports on health and safety performance should be provided by
contractors and by the facilities team to senior management.

Facilities Managers Need to be Aware of!
• Corporate and, potentially, personal legal
consequences of deficiencies in process or
personal performance with health and
safety-related processes.
• Companies and organizations can be found
guilty of corporate manslaughter as a result
of serious management failures resulting in
a gross breach of a duty of care.

Notes on Measuring Performance
The methodology of delivery and the effectiveness of contractors and/ or
in-house teams should be reviewed periodically in accordance with actual
or assumed contractual periods and controlled changes made especially;
• Where a performance related payments are included in the contract,
as additional payments need to be made to the supplier if
performance targets are exceeded.
• Where service continuity is key contract condition and failures will
result in deductions.
These reviews should be on an objective basis and be subject to stringent
business case analysis so that there are visible business-led reasons for
making any changes.
FM Delivery profile matrix is sometimes used to measure facilities
management practice and identify the capacity and capability of the
operation. Each assessment area is broken down into a number of sub-
sets and scored individually. Action plans can then be drawn up to ‘plug
the gaps’ and show where additional training and support may be needed.

KPI’s Examples
• The first popular measure is the cost/efficiency especially for
office portfolios. Related metrics in common use are cost per
sq.ft/meter of space, real estate cost and space occupied per
employee, cost per workstation.
• The second most popular performance measure looks at
service levels achieved especially for other portfolios. This is a
‘softer’ measure which tracks response times, maintenance
issues resolved, workplace environment and the like.
• Employee satisfaction is the third most popular; presumably
sourced from occupying customers, however, the effectiveness
or productivity of the accommodation and services on the
efficiency of the workforce is rarely considered.
• Recently a growing use of corporate social responsibility and
environment-related measures such as carbon ton per
employee are employed.

Scorecard Approach
Objectives Operational measurement areas for
accommodation and services
Measurement methodology
Strategic
Assisting in achieving
organization’s objectives
Improving quality of services and
accommodation; increasing efficiency of
space
Metrics associated with space efficiency and
satisfaction with accommodation and services
Customers & stakeholders
Satisfied customers,
staff and stakeholders
Talking to customers/staff at all levels
about the accommodation and services
Survey of customers; stakeholder surveys;
stakeholder interviews
Operational Excellence
Effective and efficient
operations
Better space promotes improved ‘quality
of life’ and increased productivity;
flexible working; efficiency in space
Satisfaction with accommodation; space quality;
servicing standards; occupational levels;
availability of flexible working ‘tools’
Financials
Value for money; budget
adherence
Financial metrics Operating costs; capital budget
Improving & Learning
Best practice captured
and new ideas
continually trialed
Performance compared to other
organization’s; research about new ways
of working/delivery of services
Benchmarking performance and learning
groups; measurement of performance in
research trials

EXAMPLE1 – STRATEGY
A Selection Of The Questions Might Look Like:
• Are accommodation and facilities management services
considered as part of the strategic planning discussions
for the organization and its operating units?
• Does this extend to detailed discussions about right
place, right space, right services, and right cost for each
operation?
• Has the organization considered a number of solutions to
the supply of facilities services – outsourcing in part or in
total.
• Have all options been systematically and objectively
analyzed?
• Is there a system for regular reviews of the services
supply strategy, to ensure that changes in operations are
reflected in accommodation and service supply changes?

EXAMPLE2 – PERFORMANCE MANAGEMENT
A selection of the questions might look like:
• What arrangements are in place to measure the performance of
the facilities team?
• What arrangements process exist for reacting to these
performance assessments
• In relation to service delivery, what methods are used to check
the quality of services delivered to customers?
• How objectively are these results analyzed and what process is
adopted to address shortfalls in performance?
• How does the facilities operation assess its performance
compared to other similar operations in the sector and against
the performance of external service providers?
• Is this achieved by benchmarking with other sector
organizations, using information that comes from services
provided by both in-house and external facilities teams?

Technologies Avalable for Facilites Managers
These technologies benefit the facilities manager by providing
predictive tools against which to measure the building in
operation, enabling the infrastructure to be benchmarked
against its virtual model, as servicing, maintenance and refits
are carried out.
New Platforms / Hardware
• Cloud Computing which enables access to corporate
information / software from any place, particularly
applications like web based CAD delivered as a service over
the Internet
• Digital Camera Technology assists with, for example, remote
security and remote maintenance inspections.
• RFID (Radio Frequency Identification) will track assets,
enabling immediate inventory updates, asset valuations and
improved asset security.

The facilities
sector will
need to decide
how
technologies
can be used to
enable the
more efficient
management of
buildings and
thereby add
value to the
organization’s

New Software in FM
• FM teams are used to CAFM (Computer Aided Facilities
Management) and IWMS (Integrated Workplace
Management System), which are useful in facilitating the
delivery of services which support operations.
• BIM (Building Information Modeling) will lead to improved
design, servicing capability, more efficient workspaces and
energy savings through pre-delivery modeling, with 5D BIM
technologies offer the interoperability of CAFM and BIM
systems with time and cost data, to produce the prospect of
real time or predictive management of space, equipment,
utilities and working environments.
• More recent developments have seen a further advance of
BIM: 6D BIM which adds the Operating and Maintenance
Phase (that is facilities management) to the BIM process.

IT IS ENVISAGED THAT;
• In the workplace, the impact of gestural interfaces such as Kinect will
change the way occupiers operate. Kinect is a motion sensing input
device by Microsoft based on a webcam-style device. It enables users to
control and interact with hardware without the need to touch screen or
keyboard, through an interface using gestures and spoken commands.
• Nanotechnology will eventually have a profound effect on materials,
servicing products, energy consumption and much more. Nano
technology is the engineering of functional systems at the molecular
scale. Constructing or reconstructing building materials opens up the
prospect of new materials with longer maintenance free lifecycles.
• Motes will provide un paralleled technology for remote sensing of, among
other things, workplace environments by providing remote information
retrieval for the facilities manager who may then respond by adjusting
building management systems to save energy or improve working
environments. Motes form an integral part of wireless sensor networks
(WSN), consisting of spatially distributed autonomous devices which use
sensors to co-operatively monitor physical and/or environmental
conditions – temperature, sound, vibration, pressure, motion or
pollutants, at different locations

The Trend For Interoperability
The trend is for the interoperability of pre-existing systems with GIS
(Geospatial Information Systems), RFID (Radio Frequency Identification),
building control, security and other systems to enable the facilities manager
to remotely manage a facility. Interoperability can be seen in;
• BIM Storm is a Cloud computing collaborative process that leverages web-
based BIM capabilities to enable data sharing among multiple software
programs including BIM software, GIS systems, Google Earth, Excel and
other sources, and even hand drawings. These online ‘data swaps’ allow
large amounts of business processes to be substantially reduced in
duration while improving accuracy by not recreating data at each step.
• SharePoint uses the ‘cloud’ to store, synchronize and share important
content with teams. This may vary from FM building/service information
to team management/HR information. The system gathers information
from various locations and priorities work tasks intuitively.
• Newforma Project Centre software is the building and infrastructure
industry’s most integrated and comprehensive solution for managing all
forms of project information, whether at the office, from the cloud, or on
the move. It has web access and seamless connectivity with other
companies.
• HOWEVER: the traditional property management programs and
accounting systems do not link seamlessly with the facilities-focused
systems.

BIM for Facilities Managers
The speed with which BIM is developing suggests that it will soon become a
vital part of the facilities management portfolio of aids. BIM facilitates better
management of building life-cycle and space management requirements by:
• SIMPLIFIED PROJECT DELIVERY. The use of BIM templates greatly simplifies project
delivery, for example, where buildings are refitted with similarly specified finishes on
all floors or a retailer is refitting a portfolio of stores in a similar manner.
• EFFICIENT PROJECT DELIVERY. The availability of project information on line with the
tracking of design changes and delivery will increase the efficiency of project
management, improving completion times and reducing delays.
• SPACE MANAGEMENT. The 3D BIM formats make the planning and subsequent
management of space much more efficient.
• VISUALIZATION. The powerful 3D capabilities of BIM and its capability to display
potential and actual changes over time (4D BIM) will facilitate work scheduling, the
tracing of design ‘clashes’, change tracking and the training of facilities and
engineering personnel.
• THE MANAGEMENT OF SECURITY AND EMERGENCIES. BIM will assist with the
analyzing and planning for emergency management, escape routes and capacities,
blast zones and setbacks and the management of CCTV zones, scope and viewing.
• COLLECTION, ANALYSIS AND DISPLAY OF DATA. BIM can be used to collect, analyze
and manage static and real time data about how a building is operating, what parts
are occupied and enable the better management of space, energy and facilities team
resources.

The FM-BIM Vision

Project Stages Change Effects

The Impact of M&A on FM Models
Regional FM markets around the world are at different stages of
development. The UK is generally accepted to be the most mature
market with Western Europe and the US following close behind.
Wave 1 – Single
Service FM
Wave 2 – Multi
Service FM
Wave 3 – Local
TFM
Wave 4 –
Multi National
TFM

The Evolution of FM Models
There are four distinct phases or ‘waves’ of development as a market moves from the
early stage use of dedicated single service providers, up to the use of global cross-
border TFM providers. M&A plays key role in enabling an FM provider to move
through each wave; DIVISIONS ATRE SOME TIMES BULLRED WITHIN A MARKET!
• Wave 1: Fragmented Immature Market - Single-Service Offerings
Wave 1 is populated with predominantly local single service suppliers offering a single
support service such as cleaning , catering, manned security, etc. Acquiring same service
businesses to create economy of scale
• Wave 2: Maturing High Growth Market - Multi-Service Offerings
This wave is characterized by single service providers moving to two or more discrete FM
services. Market begins to polarize with larger FMs competing with multinationals for
outsourced contracts. Companies acquiring additional services
• Wave 3: Consolidating Mature Market – Local TFM Suppliers
In third wave few large TFM suppliers dominate, providing all FM services, self-delivered or
subcontracted, through one contract as a one stop shop. Acquisitions done to consolidate
markets
• Wave 4: Expanding Mature Market – Out Bound Multinational TFM
In wave 4 multinational TFM providers are present looking to deliver high quality services
for multinational clients and local customers expecting western quality services.
Acquisitions in developing markets are done in line with multinational growth and coverage
strategies seeking new geographies.

Mature Markets - Outbound M&A and Consolidation
UK & France Tier - Outbound M&A
• UK- The world’s most mature FM market and home to some of the largest FM
players with considerable outbound M&A activity by large and mid-market players.
• France - France is close behind the UK in terms of development with several world
class FMs engaged in fourth wave M&A around the world. Large corporate
customers are very sophisticated, below this level customers are still cost conscious
and wary of full outsourcing.
North America Tier – Domestic Market Focus
• Very sophisticated at the large corporate level; a huge market comprising many
regional sub-markets. There are few fourth wave participants as most providers are
focused on their domestic markets which still offer consolidation opportunities and
strong growth potential.
Japan Tier - Domestic Market Focus
• Although a developed market, M&A activity has been focused on domestic targets.
Aeon Delight, Japan’s largest FM by revenue, has strengthened its market position
by making a number of strategic mid-market acquisitions including A-Z Service and
Kankyo Seibi.

Fragmented Markets – Local Consolidation
Netherlands, Germany & Spain Tier – Local Consolidation M&A
• Netherlands - A number of prominent global FMs are domiciled in
the Netherlands including BAM Group, Facilicom and Imtech. Most
M&A activity is confined to European consolidation.
• Germany - Germany’s FM market is still relatively fragmented with
the top 10 FMs accounting for only 10% of the total market.
• Spain - The Spanish market is populated with strong infrastructure
and construction companies. The FM market remains fragmented
and less mature despite the presence of leading players such as
Eulen and Clece.
Russia Tier - A Split City Third Wave & Regional Second Wave Market
• Large and polarized market with the rich major cities embracing FM
services, yet the poor regional markets relying on mainly single
service operations. Inbound M&A has been limited; nonetheless
some high profile global players already operate in Russia – for
example Sodexo, Facilicom, Colliers and ISS.

Immature Markets – Inbound M&A
China – Strong Domestic FMS Present
Rapidly maturing market dominated by cheap labor yet with significant potential. Inbound fourth wave
activity and the emergence of strong domestic FMs are evident. ISS, entered the market by acquiring
three market-leading businesses (catering, property management and cleaning). The growth in the
property and industrial markets is significant yet procurers of FM services remain relatively
unsophisticated. This will change as standards improve and infrastructure becomes more complex. The
three largest foreign FMs are Jones Lang LaSalle, ISS and Johnson Controls.
India - Weak Domestic FMS
Total facilities management providers in India are scarce with a lack of local FM companies offering hard
FM services as well as soft. In 2012 OCS (with a strong presence in Thailand, China, and Singapore)
acquired Indian FM business Absotherm Facility Management Services (one of the few domestic pan-
India TFM companies) and subsequently acquired Mumbai based Radiant Hospitality as part of entry
plan into the region.
South America Tier - Immature FM market
key target for fourth wave acquisitions by the leading multinational FMs. There have been notable fourth
wave deals across South America in the security segment. Securitas and G4S in particular have been
expanding aggressively into the region. Brazil is the most developed M&A market. Sodexo, for example,
acquired Puras do Brazil (catering and FM provider) for US$740m in 2011.
South Africa Tier - Inbound M&A – Partnering
International interest has been rising. Multinationals have tended to enter the market with local partners
as a way of accessing large government contracts. Compass has made several acquisitions in the South
African market since 2008.
Middle East Tier - Pockets of Strength - Partnering
The region as a whole is immature though there are pockets of strength particularly in UAE and with
lesser extent in Qatar. The country with the largest potential is Saudi Arabia. Fourth wave M&A has been
limited in the region with most foreign FMs electing to partner or form JVs with local firms to enter what
is a relationship-driven market. Interesting features of the market include a modern property
infrastructure which is only just beginning to need serious maintenance, and a high proportion of
domestic property needing FM services for shared areas.

Multi Nationals in FM Emerging Markets
• The fourth wave of M&A activity in the FM market sees larger players
becoming increasingly global, turning to the immature, high growth
markets of South America, MENA and Asia to compensate for their
competitive and low growth domestic markets.
• This development is an investment in the long term as emerging markets
are risky and growth can be elusive due to the lack of sophistication of
local customers.
• The drivers of this activity are two fold: pressure to grow shareholder
value and demand from an increasingly multinational customer base for
cross-border provision of FM services. Customers want reliability, quality
and administrative ease, as well as the cost savings that come from using
a single global FM supplier.
• Corporate social responsibility (CSR) continues to be a priority for
customers’ agendas and working with trusted suppliers mitigates the
potential negatives of encountering corruption or poor working practices
that are common in emerging economies.
• Market entry strategies differ. Some FMs have followed their
multinational customers and then seeded domestic customers around
these larger contracts. Others have acquired local delivery capability,
established joint ventures, or taken the low risk approach of operating a
white collar managed service offering.

Evolving FM Delivery Models
• Strategic push by domestically-focused players to consolidate the market
– especially to combine hard FM services (utilities , M&E , maintenance
and fit out subsectors) and soft services in order to compete for the
larger multi-service bundled contracts.
• FMs continue to bundle services in response to pressure from customers
wanting cost savings by procuring from fewer suppliers. Customers
perceive self-delivered services to be better value for money and
increasingly expect FMs to self-deliver core services.
• The TFM model of delivery continues to grow its share of the larger
contracts market, putting pressure on growing FMs to invest in high
caliber people and systems to be able to manage a single source contract
across large or multi-site customers.
• FMs continue to look to move up the value chain of services, seeking to
add niche services in energy and green sectors. Customers perceive these
services as adding value rather than just a necessary cost.
• Sustained economic pressure is forcing FMs to cut pricing or risk losing
customers. Competition has increased and FMs need to work harder and
become more efficient.
• In order to protect margins, some FMs are targeting more resilient end
markets, such as the defense and pharmaceutical sectors. Customers in
these sectors are less focused on short term cost reduction initiatives and
more on avoiding business disruption.

Targeting Multi Service Bundled Contracts
• Seeking opportunities to create major economies of scale is important in
the current environment. For example, the very largest groups like
Compass, Serco and G4S are driving much of their growth from
international operations.
• Targeting international growth markets requires major investment and is
risky. Instead, the big strategic driver for more domestically focused
players is to consolidate in order to position for bigger, bundled local
authority contracts.
• On the local authority’s side, agencies are looking to focus their spending
on fewer outsourcers in order to achieve the budget cuts.
• Also the trend in the private B2B segment towards multiservice bundled
contracts and access to integrated services is clear. Example, the UK
MITIE group securing its largest ever £775 million contract to supply
integrated FM services to Lloyds Banking Group over five years.
• However, some public & private sector buyers argue against bundled
services due to increased risk with one bundled contract and a feeling
that multi-service providers can't live up to the quality delivered by more
specialist single-service contractors.

Changing FM Landscape & Blurring Boundaries
• Likely, the FM industry is going to result in a sector where fewer,
larger players are geared towards chasing a smaller number of
more significant contracts. In this sort of environment, winning the
big, headline-grabbing contracts will need to become a more regular
event as failure to capture them could have a significant impact on
investor sentiment.
• The other clear trend that is likely to continue as the market
consolidates further is the drift in core service offerings, which is
seeing some hard FM specialists become more capable in soft FM
areas and others going the other way. Inevitably this will continue to
blur the boundaries between the two areas of the market.

FM’s Valuations - Influenced By The Heritage!
• Construction/Engineering-Led FMs (5x-7x EBITDA multiple)
These FM’s are predominantly maintenance focused businesses with a project completion
culture with some cyclical price trends. The lower multiple is due to reliance on blue collar
workforce and the lack of visibility of earnings from project-based revenues.
• Support Services FMs (7x-9x EBITDA multiple)
The support services FM’s culture is focused on delivering against service level targets and
are the most resilient over hard times as increased outsourcing and a desire to save costs
in a recessionary market balance increasing downwards margin pressure from customers.
The mid-range multiple is influenced by the increasing trend of outsourced facilities
services, the visibility of earnings from long-term contracts and the increasing provision of
technical services.
• Property Services FMs (9x-11x EBITDA multiple)
These FM’s are excellent in systems and the provision of a wide range of bundled services
that keeps margins high. The higher multiples are due to the provision of higher margin
supported with a diverse white collar range of consultancy and transactional services
across the life cycle of a property, however, cyclical trends are there as a result of the
greater proportion of transactional revenues.
Note on the Valuation of FM Labor Intensive Services
Services such as cleaning , catering and security services are now commoditized and there
is strong downward pressure on margins. Large businesses reliant on these activities will
have to acquire to maintain growth. Sellers of these businesses should not expect high
valuations as most large players are content to use third party providers.

FM EBITDA Multiples - Source: Capital IQ

FM Share Price Performance
• The strong run of M&A activity in the Facilities Management sector
continued into 2014, although the pace of investment has slowed a little
but it has been upward since 2009.
• However, following a number of broadly positive quarters for the
businesses, (FTSE All Share versus FTSE Support Services), share price
performance is faltering ...in the face of wider market jitters but, the
longer term trend is somewhat more robust with macroeconomic
headwinds in Europe
• All the indications are that the underperformance of the shares are more
to do with broader market jitters than they are of any negative shift in FM
sector sentiment.
• Overall, it seems more likely that the share price issues are more a result
of contagion from other sectors which have been hit by fears over slowing
growth in China and the potential for the Fed and other national banks to
scale fiscal stimulus strategies.

FM Composite Share Index

PE Investments in FM Markets
• A slowdown in trade buyer activity, coupled with renewed
growth prospects and improved financing conditions is
creating a more fertile climate for PE investments.
• Private equity firms have been attracted to the sector
because of the high level of recurring revenues, and due to
the fragmented nature of the services market which lends
itself to a strategy of creating scale by acquisition, and
investors can expect multiple arbitrages on exit if
business plans are successfully implemented.
• A main factor behind a likely reappearance of PE investors
in the sector is boosted by the rapid growth in the
availability of leverage. This, driven by new alternative
debt funds and returning appetite among the main
lenders.

Regional Consolidation Examples
As has been for some time, rising activity with FM players consolidating
their maturing domestic markets – mainly in the smaller and midmarket
segments – as companies seek to build scale through consolidation or
plug gaps in their skill sets and to move towards the next wave of
development;
This is evident in the US market with the potential for further
consolidation is huge;
• ABM expanded its geographical reach with its US$300 million acquisition of the
Linc Group in 2011. The acquisition also allowed ABM to enter the growing green
construction and energy efficiency segments.
• EMCOR’s US$225 million acquisition of USM Inc in 2011 created a more integrated
offering for large multi-site clients due to the complementary activities of the two
businesses.
In signs of consolidation in UK market, 3 stand-out deals in 2013;
• The £221 million merger in the domestic hard FM market between construction and
support services group Kier and road maintenance provider May Gurney. (Earlier
Costain failed in its own bid to buy May Gurney in an attempt to balance out its soft and
hard FM offerings).
• The £385 million acquisition of Enterprise Group by Ferrovial's UK arm Amey plc.
• Amey Plc., part of the large Spanish contractor Ferrovial, paid £385 million to acquire
utilities infrastructure maintenance business Enterprise Group Holdings from 3i.

Selected FM M&A Deals

Fourth Wave Deals
Cross-border deals accounted for 20% of FM deals
from 2008 to 2012 with the balance being mainly
domestic infill of additional services. This trend
continued well into 2014 symbolizing the ‘Fourth Wave’
deals by large strategic acquirers from targeting new
verticals to aggressive international expansion.
The maturity of the UK and West European FM markets
has driven large players continue to look at emerging
markets for growth opportunities. This is aligned with
the globalization of the large FM’s client base which is
pushing for the cross-border provision of FM services.

Fourth Wave Deals Examples
• Two US buyers – Centerplate Inc. and Ameresco Inc. – were among the buyers of UK
FM businesses in 2013.
• GDF Suez in an effort to boost its energy services and facilities operations in the UK
acquired in 2013 UK Balfour Beatty's Workplace subsidiary for around £190 million
(earlier large-cap US private equity group Clayton Dubilier & Rice, tried to combine
Balfour Workplace and Rentokil FM, two relatively high turnover, lower margin
businesses without success)
• Large international groups such as Schneider Electric, Bouygues Bâtiments and PGGM
have been active buyers in the UK market recently as non-UK businesses seek to tap
into the expertise of the UK's highly developed FM players.
• PE-backed FM giant ISS’s successful entry to the Chinese market was through
acquisitions of leading Chinese catering, property management and cleaning
businesses.
• Privately owned UK-based OCS Group made a number of small FM acquisitions in
India as it attempts to become one of the first providers with Indian national
coverage. In April 2012 it acquired Absotherm Facility Management Services and a
month later acquired integrated FM specialist Radiant Hospitality Services.
• UK-listed catering and FM business Compass Group demonstrated its commitment to
globalization by accelerating its acquisitions in the emerging economies. Acquisitions
included India-based Vipul Facility Management and Turkish catering/FM group
Sofra Yemek Üretim Ve Hizmet.

Private Equity M&A Activity - Examples
PE investment in the sector on the average is responsible for nearly 10% of
all multi-service global facilities management deals since 2008 with clear
preference towards higher margin FM models. Notable PE houses with
investments in the sector include GS Capital Partners, EQT, CCMP,
Charterhouse, 3i plc, Mercapital and Cinven.
Recent deals include the buyouts of Veritek, Nigel Frank and York Mailing,
among others;
• Jordan Company high profile acquisition of VT Services from Babcock for
US$98 million. VT Services, which provides FM services to the US
military, will be built up organically and through acquisitions.
• Pacific Equity Partners completed its US$720 million acquisition of
Australia-based Spotless Group in what will be one of the largest FM
deals of the past four years. Spotless had previously rejected a US$657
million offer from the Blackstone Group however shareholder pressure
forced the board to accept the latest deal.
There have been few exits in recent years, like Apax managing to generate
significant value through its sale of pan-European Faceo to Vinci, however,
there have been several high profile failed exits, such as Charterhouse
pulling the sale of PHS in the UK, and G4S shareholders failing to ratify a
merger with ISS.

FM Trends 2012 – 2014
• FM deal volumes have been rising since the low of 2009. Second and
third wave domestic consolidation accounts for most deal activity, but
cross-border M&A is increasing particularly in emerging markets.
• Technical services such as mechanical & electrical (M&E) engineering
and energy management are the most targeted segment of the FM
market as multinational seek integrated cross-border FM services with
local delivery capabilities being essential.
• A significant increase in PE investment across a broad size range within
the mid-market with focus on niche operators in the wider business support
services area as in the security, catering, landscaping and document
management spaces
• The earlier economic pressures has delayed the exit plans of several
large private equity-backed FMs; most notably, GS Capital Partners and
EQT failed to exit their investment in ISS as G4S shareholders voted
against a merger.
• The large listed FMs have performed well compared to global stock
markets with the exception of those with high exposure to the
construction market. Typical trading multiples have remained at 6x-10x
EBITDA.
• Customers are driving evolution in FM business models while FMs are
more focused on building long term relationships with customers

Prospects for M&A and the FM Industry
• Although the trend to outsource facilities services continues, the uncertain
economic environment and the desire to cut costs in non-core areas means
organic growth rates will remain low in the medium term. FMs consider M&A and
partnering a fundamental part of any growth strategy.
• M&A activity levels may slow as many businesses that have been active in the M&A
markets over the past years need time to digest their acquisitions, however, these
consolidation have altered the competitive landscape in the larger FM space.
• Companies with non-core assets to off-load have few potential buyers to target as
many will not be keen to sell to competitors with the possible exception of overseas
bidders looking for strategic foothold in the market.
• Valuations in emerging markets are likely to continue to rise as economic
conditions begin to improve and demand for the highest quality assets becomes higher
as buyers seek to increase the number of value-added services to clients.
• The second and third wave markets are likely to continue to consolidate
regionally through infill acquisitions of new services and gaining fuller
geographic coverage.
• Private equity investors can face difficulties to exit some of the current FM
businesses while other PE can be expected to return as M&A markets become
more positive and leverage improves.

Sources;
• Royal Institute of Chartered Surveys
(RICS) - Strategic Facilities Management
guide 1st Edition 2013.
• www.mergers-alliance.com
• Grant Thornton Media Centre News -
Insights Into Facilities Management

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The content of this presentation is intended to provide a general guide to the
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