Houlihan Lokey presented its latest Equipment-as-a-Service Market Update. Below are key takeaways from this edition of the report:

• Announced transactions in the YTD period have outpaced pre-COVID-19 levels, reflecting a healthy market for strategic investments despite a sequentially slower quarter.
• Noncore acquisitions have been a major theme, as many companies and financial sponsors aim to enter new segments and geographies, seeking more attractive end markets. For example, Kaizen Automotive Group, a large, multi-jurisdictional automotive dealership, acquired Flex Fleet Rental, the leading national provider of pickup truck rental solutions to contractors of all sizes. Houlihan Lokey acted as the exclusive financial advisor to Flex Fleet Rental.
• Private equity continues to be a strong driver of acquisitions, with many groups pursuing investment opportunities that present significant growth opportunities within various specialty equipment segments of the equipment-as-a-service sector. For example, ZMC, a private equity group targeting the media and communications sectors, acquired InProduction, a leading provider of temporary structures for live events. Houlihan Lokey acted as the exclusive financial advisor to ZMC.
• Record profits in 2021 and 2022 have created pressure for portfolio companies to “prove out” their growth as more than a temporary market-wide buoy.

The equipment-as-a-service team covers a wide range of business models, including traditional equipment rental, specialty equipment rental, route-based equipment services, transportation equipment leasing, vehicle fleet management, equipment dealerships, asset pooling services, and infrastructure and municipal equipment services.