Staffing Industry Insights – Winter 2020

As the staffing industry continues to benefit from a positive operating environment across most industry sectors, owners continue to capitalize on their strong financial performance by realizing value through either a full company sale or recapitalization transaction.

Staffing Industry Insights – Winter 2020

Most U.S. public staffing companies continue to be absent from recent M&A activity, as staffing industry acquisition activity remains primarily driven by private equity-backed strategic buyers seeking to scale their existing platforms.

Strategic buyers accounted for 94% of the staffing industry acquisitions in 2019, with private equity funds (financial buyers) investing in a new platform acquisition, accounting for the other 6% of transactions.

– Private equity acquired only 9 new platform staffing investments in 2019, a noticeable decrease following the 28 new investments completed in each of 2018 and 2017.

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 remain highly sought after.


Sources: SEC filings, S&P Global Market Intelligence, Mergermarket, company press releases and various news sources (e.g., Staffing Industry Analysts, American Staffing Association, The Deal, The Wall Street Journal)

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