DC Discusses: Blue‑collar technical services in private equity’s sights

The services on offer

Engineers, inspectors, installers, maintainers keep the infrastructure of daily life functioning and are becoming increasingly valuable. As the market ponders the risks and benefits of automation, those physical, skills-based, route-density-driven businesses are emerging as some of the most investable assets in the market.

Across the Industrials and Tech-enabled Services sectors, we see investor interest rising sharply. Segments like steel; Testing, Inspection, Certification, and Compliance (TICC) ^[1]; fire safety ^[2]; security services and broader Infrastructure services ^[3] are pulling in capital at pace. Companies in these sectors share a commonality, that their work still needs people to get done. They often operate in highly-regulated industries, rely on trained technicians, and provide services that cannot solely be delivered remotely. AI can help drive efficiency by optimizing scheduling, simplifying compliance reporting, and helping businesses capture value from long-ignored datasets ^[4] – but it cannot install a fire system, fix a leaking pipe, maintain a datacenter, or reinforce a power substation.

These businesses offer three advantages that we believe are increasingly attracting investor interest: they are highly defensible because the work is physical, regulated, and requires certified training; they may benefit from recurring demand linked to compliance needs, safety requirements, and ongoing infrastructure maintenance; and AI has the potential to make them stronger and more productive rather than rendering them obsolete.

We have observed businesses in infrastructure services that support power and water networks experience higher demand than in previous years. New AMP8 (the UK water industry’s regulatory and investment cycle) frameworks ^[5], extensive grid upgrades, and net zero commitments, can mean more digging, more maintaining, more physical intervention. These are long-term, highly challenging operations where AI can help plan the job, but it cannot do the job.

Even consumer ‘technical services’, from gyms to marinas, benefit from offering something AI cannot replicate: in-person experience, human expertise, and physical presence. Similarly, event companies have become more attractive because human-to-human interaction cannot be commoditized by AI. As online content becomes cheaper and more abundant, we anticipate in-person engagement to become more valuable.

How this impacts investment

As AI risk is now top of mind, we’re seeing a clear valuation divide ; digital-heavy companies, once prized for asset-light models, are now having to resolve model disruption and deal with questions over margin pressure and whether their tech may become redundant. We have observed listed SaaS and data businesses achieve lower valuations despite stable fundamentals as the market gets the jitters over which business models are at most risk.

Private equity must make these calls fast, and the need to assess AI exposure early in diligence is speeding up decision-making. Funds don’t want uncertainty, they want clarity, and perceived safety from AI is making blue-collar technical services relatively more attractive.

As one investor put it recently: “Before we even ask whether AI can enable the business, we ask how AI might hurt it. If the answer is ‘not much,’ then great – that’s one fewer unknown.” Blue-collar technical services routinely clear that bar. They increasingly sit at the center of how infrastructure, industrials and technology converge.

This perceived resilience to AI disruption is driving more capital into technical services. Investors can see an opportunity not just for steady cash flows, but to unlock value that inefficient legacy processes may have historically left on the table ^[6].

The rise of AI is also increasing the need for human-delivered infrastructure work. Data centers, chip manufacturing sites, and hyperscale computing assets are now treated as real infrastructure investments ^[7]. They require huge amounts of power, cooling, grid connectivity, and ongoing maintenance. In the past 12 months we have advised on 48 transactions in the Industrials sector, one third of which involved or supported the development of technology or automation of industrial and infrastructure services ^[8].

Add the broader energy transition work of grid upgrades ^[9], power resilience, water network expansion ^[10], and the result is an unprecedented demand for labor-intensive services that AI cannot replace. It’s one reason we’re seeing global capital reallocations: one large private equity investor recently announced it was moving resources from Hong Kong to London ^[11] because there is more opportunity in Europe where blue-collar technical industries are deep and established. 

Closing view

In our view, AI isn’t killing blue-collar technical services, it’s elevating them. These businesses provide the physical foundation on which AI relies, from power networks to water systems, to mission-critical buildings and data centers. Considering their invaluable services, we believe that private equity will continue to be drawn to the blue‑collar and “man in a van” businesses as reliable and stable assets. Those businesses that keep the world running instead of trying to automate it may ultimately prove to be the biggest winners of the AI era.

This article has been prepared solely for information purposes and is not intended to function as a “research report.” In particular, this means that it is not intended, nor does it contain sufficient information, to make a recommendation as to the advisability of investment in, or the value of, any security.   

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Sources

1. https://www.consultancy.eu/news/12808/healthy-ma-momentum-in-the-testing-inspection-certification-sector
2. https://internationalfireandsafetyjournal.com/fire-growth-report/
3. https://www.pwc.com/gx/en/services/deals/trends.html
4. https://www.newsweek.com/ai-promises-make-blue-collar-work-safer-more-efficient-2102553
5. https://www.anglianwater.co.uk/news/major-projects-framework-tender
6. https://www.newsweek.com/ai-promises-make-blue-collar-work-safer-more-efficient-2102553
7. https://www.mckinsey.com/industries/technology-media-and-telecommunications/our-insights/ai-power-expanding-data-center-capacity-to-meet-growing-demand
8. DC Advisory and Daiwa transactions advised between 01/04/2025 – 25/03/2026, including those not yet publicly announced, in the ‘Industrials’ sector, which we define with the following subcategories: ‘Industrial & Infrastructure Services’ and ‘Industrial Automation & Electronics.’ Please note that others may differ in how to categorize the subcategories we reviewed or how to define those categories. Publicly available transactions may be viewed, using the 'Industrials' sector filter, on www.dcadvisory.com/transactions
9. https://www.nationalgrid.com/the-great-grid-upgrade
10. https://www.water.org.uk/investing-future/ps104bn-investment-plan/driving-economic-growth
11. https://www.privateequitywire.co.uk/coller-capital-relocates-hong-kong-office/