M&A activity

Transaction multiples in the BPO and the outsourced customer care sector are highly dependent on the scale of the business, niche focus and degree of technology enablement.

Typically, for sub €200m deals involving customer contact management centres, we are seeing EBITDA multiples ranging from 5.5-7.5x. However, for businesses with scale, tech-enabled solutions, market-leading positions and broad geographic profiles that stretch across continents, EBITDA multiples often exceed 10x.

Companies providing vertical specific solutions, or operating in emerging sub-sectors of the BPO market such as client support services, are attractive targets to incumbents looking to deliver end-to-end vertical solutions and move up the value chain.

These companies are often being acquired at close to double-digit multiples, as a scarcity of available assets, an overhang of private equity funds and strong trade balance sheets drive up valuations.

Meanwhile, cross-border transaction levels in the client support services sector and outsourced customer care sub-sector continue to remain high. Leading providers are turning to M&A to acquire onshore assets as clients increasingly seek providers who understand local culture, possess specific market knowledge and operate in the same time zone.

Selected recent deals

PE firm Vespa Capital backed the recapitalisation of Chase Search and Selection, a specialist in recruitment services to the pharmaceutical, biotech and healthcare industries. Clearwater International advised Chase Search and Selection Limited on the deal.

Convergys Corporation acquired buw, Germany’s largest independent BPO provider. Convergys is looking to expand its presence in the growing €3bn German outsourced customer management services market.

Liberata, a business process outsourcing provider to local government agencies, was sold by PE house Endless to Japanese-listed company Outsourcing Inc.

CVC Capital Partners acquired an 80% stake in SPi Global Holdings Inc, a provider of voice and non-voice services in the areas of knowledge process outsourcing and customer relationship management. CVC has since funded the purchase of China-based Bachieve International.

Thomas Cook is handing over 3,000 hotel contracts to Australian online travel agent Webjet as part of an outsourcing deal. Webjet’s European subsidiary Sunhotels will assume control of contracting and sourcing hotels for the company’s complementary business.

Private equity

The market has all the hallmarks of an attractive industry for PE such as long term contracts, strong visibility of earnings, an asset light model, strong cash conversion and positive industry trends. Indeed, PE groups are now winning the race for some of the largest assets in the outsourced customer service and BPO sectors, driven by banks being happy to help fund large transactions.

Investors also see strong opportunities to scale businesses through targeted acquisitions that often leverage technology.

Typically, PE exits have either come in the form of secondary buyouts by larger funds or trade consolidators looking to take advantage of favourable market dynamics such as Capita, Europlan and Kleinwort Benson.


The market will continue to be driven globally by the demand for higher quality, specialised customer service solutions. Companies which can provide this will have a significant competitive advantage in the market and will attract interest from both PE and strategic investors.

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