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 80% of the staffing industry acquisitions in 2018, with private equity funds (financial buyers) investing in a new platform acquisition accounting for the other 20% of the transactions.
– Financial investors acquired 28 new platform staffing investments in 2018, following the 28 new investments in 2017 and 20 in 2016.
Professional staffing companies (including IT, digital / creative, healthcare and life sciences) 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 remains highly sought after.