The business services sector is experiencing significant mergers and acquisitions activity despite the downturn, according to a new report.

The report, from professional services firm PricewaterhouseCoopers (PwC), showed that business services deals reached a five-year high with 517 transactions recorded between 1 July 2007 and 31 June 2008, compared with 480 in 2006/7. The most active business services sub-sector for the period was professional advisory with 181 deals between 1 July 2007 and 31 June 2008.

In 2007/8, the human capital management sector deal volume and value increased by 22% and 40%, respectively, over 2006/7. This sector was dominated by recruitment process outsourcing companies.

Simon Hawes, head of business services at PwC, said: “Private equity firms have a real opportunity to pick up some good assets. In the last major downturn in 1991/92, corporates began spinning out non-core assets following rationalisation and restructurings. If this trend is replicated it will produce attractive buying opportunities.”