The Business Services industry found firmer footing in the second quarter of 2026, with most sectors posting positive equity returns and signs of improving momentum. While valuations remain below year-ago levels, resilient M&A activity and stabilizing economic conditions suggest the industry is entering the second half of the year on firmer ground.
The outlook now hinges on whether improving conditions in commercial real estate and the labor market can offset continued uncertainty surrounding AI's impact on consulting and technology services.
Equity performance improved across most Business Services sectors during the second quarter. The gains, however, came off a low base, with annual returns remaining negative across all but one sector.
Real Estate Services was the clear standout, the only sector to advance on both a quarterly and an annual basis, with equity values up 3.6% in the quarter and 4.2% over the year. The move tracks a broadening recovery in commercial real estate, where investment activity is expected to rise roughly 16% in 2026 and office rents posted their strongest growth since early 2020.¹
Environmental & Facility Services again proved the most stable corner of the industry, adding 1.1% in the quarter on resilient, essential-service demand and durable pricing power.² Risk & Insurance rose 3.8% in the quarter as the sector continued to attract investor interest given its relatively predictable earnings and recurring revenue profile.
After declining 25.9% over the past year, Human Capital & Staffing posted the strongest quarterly equity return of any Business Services segment, gaining 10.1% during the second quarter. The rebound coincided with strengthening labor market conditions, including better-than-expected job growth, continued gains in temporary help employment, and a sharp increase in job openings. While overall hiring activity remained subdued, these indicators pointed to improving conditions for the staffing industry.³
Consulting & IT Services was the lone decliner, falling 11.4% in the quarter and 33.1% over the year. The pressure intensified in mid-June, when Accenture, a bellwether for the sector, fell roughly 20% in a single session after cutting growth guidance and reporting softer bookings. The sell-off came amid growing investor concern that agentic artificial intelligence could compress the hours-based billing model on which much of the sector depends.⁴
These performance trends were reflected in valuation multiples. Environmental & Facility Services continued to command the industry's highest valuation at 15.8x EV/EBITDA, supported by resilient demand and durable pricing power. Real Estate Services followed at 14.4x, reflecting improving sentiment toward commercial real estate fundamentals.
At the other end of the spectrum, Human Capital & Staffing (11.6x), Risk & Insurance (10.6x), and Consulting & IT Services (10.2x) continued to trade at lower valuation multiples, underscoring the more cautious outlook toward these segments relative to the broader Business Services sector.
The Dinan Business Services Index† tracks a curated group of publicly traded Business Services companies selected to reflect the market dynamics most relevant to lower middle-market M&A. Since its 2021 inception, the index has returned 14.8%, compared with 71.8% for the S&P 500, and currently trades at 11.7x EBITDA versus 18.3x for the broader market. Its message echoes the broader narrative: Business Services valuations improved modestly during the quarter but continue to trade at a meaningful discount to the broader market.
Business Services M&A volume totaled 540 transactions in the second quarter, up 1.7% from the prior quarter and 6.7% from a year earlier, a steady climb that stands out against the softer equity backdrop. The strength was consistent with a broader deal market in which value has concentrated in larger, strategic transactions as interest rates settled into a more stable range.5
The quarter's marquee deals spanned every sector. The largest was Long Lake's $6.8 billion acquisition of American Express Global Business Travel, followed by Veolia's $3.0 billion purchase of CleanEarth in Environmental & Facility Services and KKR's $3.0 billion acquisition of Crowe in Consulting & IT Services. Risk & Insurance remained a consolidation engine, with deals including DB Insurance's $1.7 billion acquisition of Fortegra and The Doctors Company's $1.3 billion purchase of ProAssurance, as strategic and financial buyers remained active in the sector.6
The pace at which artificial intelligence reshapes IT services will remain the single most important variable for Consulting & IT Services, while the trajectory of commercial real estate and the labor market will shape Real Estate Services and Human Capital & Staffing. A stable interest rate environment and well-capitalized private equity buyers should continue to support deal flow through the second half of the year. With most sectors recovering sequentially and transaction volume building, Business Services appears to be entering the back half of 2026 on firmer ground.
† The Dinan Business Services Index is a proprietary index of publicly traded mid-market business services companies maintained by Dinan Capital Advisors. Index composition is available upon request.
1 CBRE. "U.S. Real Estate Market Outlook 2026." www.cbre.com; CBRE. "Investors Set to Deploy More Capital in 2026 as U.S. Commercial Real Estate Market Stabilizes." www.cbre.com
2 Morgan Business Sales. "2026 Waste Management & Environmental Services M&A Report." morganbusinesssales.com; Ad-Hoc-News. "Cintas Corp Guidance and Analyst Views." www.ad-hoc-news.de
3 Staffing Industry Analysts. "June 2026 US Jobs Report." www.staffingindustry.com; U.S. Bureau of Labor Statistics. "The Employment Situation, May 2026." cceonlinenews.com
4 Yahoo Finance. "AI Disruption Threat on Accenture (ACN) Overdone?" finance.yahoo.com; Matterfact. "IT Services vs AI: Accenture's Crash Puts the Whole Services Model on Trial." www.matterfact.com
5 PwC. "US Deals 2026 Midyear Outlook." www.pwc.com; EY. "M&A Outlook: Stronger US Deal Market in 2026 Despite Mixed Economic Signals." www.ey.com
6 Leader's Edge. "Brokerage M&A Holds Firm in Volatile Economy." www.leadersedge.com; PwC. "Insurance: US Deals 2026 Midyear Outlook." www.pwc.com