The European laboratory services market comprises businesses that provide laboratory testing services. We segment the identified assets by end market into the following categories: generalists, medical, environmental and food

The European market has a fragmented long tail, though several actors dominate the landscape by leveraging Europe-wide coverage. Executives interviewed by Gain.pro foresee these industry giants continuing their cross-border consolidation strategies, mostly aimed at increasing service levels by ensuring customer proximity and quick turnaround times which, in turn, allow for more attractive price setting. Local niche specialists will continue to have a right to exist until reaching a certain size, at which point they will become interesting acquisition targets for large incumbents

Although sponsor-led interest in European laboratories has been high, investors must punch their weight by competing with price tags offered by large strategics they often cannot match. Strategic buy-and-build plays typically come hand-in-hand with experienced M&A teams and large cash reserves to rapidly seize acquisitive opportunities once they arise, leaving little room for financial sponsors to act. Primary drivers for investors are (i) the market’s historical growth trajectory and a promising outlook, (ii) the potential to roll up the long tail of smaller incumbents through a buy-and-build strategy and (iii) the resilient nature of lab testing services with numerous end-market applications

ESG pain points primarily relate to environmental issues. Enormous amounts of plastic waste are generated throughout the lab testing process to comply with ISO standards. Industry experts believe this is unlikely to change in the near future. Incumbents can somewhat limit their CO2 footprint by implementing plastic recycling programmes. Governance topics primarily relate to maintaining the quality of the analyses and results, as players feel demand pressure for increasingly shorter turnaround times