JUST HOW HOT IS TODAY’S STAFFING M&A MARKET AND HOW LONG WILL IT LAST?

Growth Capital Partners Reports 37 Transactions in the First Quarter of 2007

HOUSTON, April 4, 2007/PR/ - Growth Capital Partners reported today that 37 staffing transactions, completed by 33 different buyers, were announced in the first quarter of 2007. While the overall number of transactions being reported is only slightly higher than in recent quarters, buyer demand for fast growing mid-sized companies in the professional staffing niches is strong, with sellers seeing premium multiples and terms in many cases. Buyer interest also exists for large, fast growing commercial staffing firms with professional management teams in place. Conversely, valuations remain considerably lower for smaller businesses, companies with lower margins and those businesses growing at less than industry averages as buyer interest for these companies is much more targeted.

Professional staffing companies continue to be the most attractive targets for today’s staffing acquirers as 78% of the announced transactions in the first quarter of 2007 involved these specialty staffing firms. Not only are more transactions being completed in the professional staffing space, but the prices being paid by buyers are considerably higher, especially for established companies within the accounting/finance or legal staffing sectors. Likewise, fast-growing IT staffing companies continue to generate substantial buyer interest and multiple offers as 6 deals were announced in the first quarter of 2007. Finally, M&A activity for commercial staffing companies is modestly growing, but targeted, with 8 transactions announced in the first quarter of 2007.

“Buyer interest from both strategic buyers and the private equity groups remains strongest for well-managed businesses in the faster growing segments of the staffing industry, namely legal, finance and accounting, and IT staffing,” commented John Niehaus, Director of Staffing Services and Human Capital Management for Growth Capital Partners. “Certain areas within healthcare staffing are also particularly attractive to today’s buyers, including companies in the allied healthcare staffing, locum tenens and travel nurse sectors.”

“The key question that most sellers are now contemplating is, ‘How long will these favorable M&A conditions continue and will purchase multiples increase in the near future?’”, continued Mr. Niehaus. “With multiples and interest for professional staffing businesses high, private equity still aggressively seeking to deploy capital, capital gains taxes and interest rates still low, and a growing degree of uncertainty over how much longer the current domestic economic expansion has left to run, we are seeing many prudent professional staffing company owners conclude that multiples and buyer interest are at their peak and that now is the time to evaluate offers for their businesses.”

Among the notable deals announced in the first quarter of 2007, On Assignment acquired Oxford Global Resources, a $177 million national provider of high-end IT staffing services; Career Blazers, a northeast-based provider of administrative staffing services, was acquired by Global Employment Solutions; Ablest, Inc., a $140 million revenue public staffing company providing predominately commercial staffing services, announced that it had received a proposal from management and private equity to take the company private; Westaff, Inc., another public commercial staffing company, announced that H.I.G. Capital, a Miami based private equity firm, and Mike Willis together purchased 47.5% of Westaff’s outstanding stock; and Keane Inc., a $950 million provider of IT services, announced that it had agreed to be acquired by privately held Caritor Inc. for approximately $854 million.

About Growth Capital Partners, L.P.
Growth Capital Partners, L.P. is a premier, client-focused investment and merchant bank serving both private and public middle-market companies, with a specialty practice devoted to the Staffing industry. Since the firm's inception in 1992, GCP has completed in excess of 200 transactions, raised more than $1 billion of institutional capital (through private placements of equity, subordinated, and senior debt), and completed merger and acquisition transactions with an aggregate value in excess of $3.0 billion.

For more information on Growth Capital Partners’ services, including its specialty practice for Staffing, IT Services and HRO companies, please contact John Niehaus at jniehaus@growth-capital.com or visit our website at www.growth-capital.com.

Source: Growth Capital Partners, L.P. member FINRA – SIPC

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