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Facilities Management, Building the Next Phase
Facilities Management and PE Investment: Scaling in a Changing Sector
FM market overview
Facilities management (FM) rarely attracts attention when it is working well. Buildings remain safe, compliant, and operational, and life carries on. Yet across healthcare, education, and commercial estates, FM is essential infrastructure, and a sector largely built by founders.
• Market size: Total UK Facilities Management market (including in-house provision) estimated at £69–75bn in 2025
• Structural drivers: Regulation, increased outsourcing, and technology adoption
• Non-discretionary demand: FM spend is driven by compliance, safety and operational continuity, not economic cycles
• Customer priorities: Greater focus on consistency, transparency and assurance, as organisations concentrate on core activities
• Implications for founders: Growing opportunity alongside a higher bar for operational capability, systems and leadership investment
• Investment response: Rising expectations are prompting more founders to explore minority private equity as a way to fund the next phase of growth while retaining control, culture and meaningful equity ownership
Outsourcing, Recurring Revenue, and Market Fragmentation
Outsourcing has been a defining trend in UK FM, with data estimating outsourced services at £49 billion of the market. While large, listed groups exist, the market remains highly fragmented. Many regional and founder-owned SMEs continue to play a significant role, and almost a third of leading public-sector FM suppliers are still classified as SMEs.
FM services are typically delivered through long-term contracts, often spanning multiple years, with high renewal rates driven by service quality, compliance obligations, and switching costs. Whether soft FM (cleaning, grounds maintenance, security) or hard FM (mechanical, electrical, statutory compliance), these relationships are durable and recurring.
The market is split between soft, hard, and integrated FM. A 2025 snapshot of UK FM contracts suggests roughly 30-35% soft, 35–40% hard, and 25-30% integrated (Baachu UK FM Report, 2025).
Why Private Equity Is Paying Attention
FM is increasingly attractive to private equity: the market is fragmented, services are mission-critical, and businesses have predictable recurring revenue. Buildings must operate regardless of economic conditions, and the sector has proven resilient across recent economic cycles.
For founders, PE interest is not about selling out; it is about recognising that the same characteristics that attracted clients – reliability, recurring revenue, defensiveness – can support growth investment.
Minority Investment as a Growth Tool
For many FM founders, minority PE investment offers a balance. It can fund investment in systems, leadership and service expansion, support bolt-on acquisitions and introduce experienced strategic input.
Crucially, it also creates options. Succession planning becomes proactive rather than reactive, and future pathways, whether continued growth, partial exit or longer-term transition, can be shaped over time.
Our Experience Partnering with FM Founders
At Key Capital, our experience in FM consistently shows that the best outcomes come from working in partnership with founders and management teams, not control
Our investment in Smarter Services reflects this approach. Built on long-term contracted revenues, the business has expanded across cleaning, property maintenance and grounds services, and entered the healthcare sector through acquisition, while keeping founders and management at the centre of decision-making.
In practice, the value of a minority partnership is often felt in the day-to-day running of the business. For founders, this can mean greater structure around decision-making, clearer strategic priorities and the confidence that comes from having an experienced partner alongside them.
In the video below, Jason Southwell, CEO of Smarter Services, shares his perspective on how working with Key has helped bring clarity, discipline and focus to the business, supporting stronger management and enabling the team to spend more time building for the future.
How has PE added value
At Smarter Services, we have invested in strategy, people and systems to build a robust platform for integrating complementary acquisitions, and we are actively looking for suitable opportunities that enhance the group’s capabilities while preserving the culture and values of the businesses we partner with.
Since investing in Regency, we have guided a planned founder succession, appointed a new CEO, strengthened the finance function, and introduced a complementary commercial offering focused on ESG and energy efficiency, helping clients meet sector demands while enhancing the long-term value and performance of their buildings
With the sector evolving and the demands on FM businesses increasing, founders are increasingly looking for partners who can help them navigate growth with greater clarity and confidence, something explored in the video below.
Ryan Meredith, Smarter Services, Partnering with Key from a finance function viewpoint
Looking Ahead
FM remains a resilient, growing sector, but the bar for founder-led businesses is rising. Minority private equity offers a way to fund growth, strengthen capability and preserve entrepreneurial control. If you’re exploring the next phase, we’d welcome a conversation.
We enjoy what we do and we’re good at it – Key Capital Partners
~ Data source Baachu UK FM Report, 2025 UK Facilities Management (FM) Market Report 2025 – 2028 –