As the staffing industry continues to benefit from a positive operating environment across most industry sectors, owners are capitalizing on their strong financial performance by realizing value through either a sale or recapitalization transaction.
Noticeably absent from the surge in M&A activity are most of the public staffing companies, as staffing industry acquisition activity remains primarily driven by lesser known privately held buyers.
Strategic buyers accounted for 85% of the staffing industry acquisitions in the first six months of 2018, with private equity (financial buyers) investing in a new platform acquisition accounting for the other 15% of the transactions.
– Financial investors acquired 11 new platform staffing investments in the first half of 2018, following the 28 new investments in 2017 and 20 in 2016.
Professional staffing companies (including IT, healthcare, life sciences, finance and accounting and creative/digital staffing) continue to see the most widespread demand from buyers and investors.
Buyers continue to have very specific criteria as they evaluate acquisition targets. Acquirers desire companies with a strong blend of both recurring revenue growth and profitability, with significant attention paid to customer diversification and the gross margin impact of potential acquisitions. Proven management teams desiring to stay on post-transaction also remain highly sought after.