Growth Capital Partners Reports 117 Transactions in the First Nine Months of 2007

HOUSTON, TX, October 3, 2007 – Growth Capital Partners reported today that 31 staffing businesses were sold or merged in the third quarter of 2007.  For the first nine months of 2007, 117 transactions have been reported.  Despite the tightening credit market, conditions remain favorable for quality transactions to be completed, as both strategic corporate buyers and private equity groups continue to be active suitors for fast-growing, profitable, scalable and well-managed professional staffing businesses.

Professional staffing companies continue to be the most attractive targets for today’s staffing acquirers as 80% of the announced transactions in the first nine months of 2007 involved these specialty staffing firms.  Not only are more transactions being completed in the professional and niche staffing sectors, but the transaction multiples being paid by buyers continue to be considerably higher, especially for top-performing companies within the accounting/finance or legal staffing sectors.  Likewise, fast-growing healthcare and IT staffing companies continue to generate substantial buyer interest and multiple offers as 19 healthcare staffing and 16 IT staffing transactions were announced in the first nine months of 2007.  Finally, M&A activity for commercial staffing companies remains more targeted, with valuation multiples strongest for companies that have annual sales above $25 million with above-market gross and EBITDA margins.  There were 23 commercial staffing deals announced in the first nine months of 2007.

“In today’s highly competitive staffing environment, specialization is critical for smaller providers seeking to compete against the larger national staffing businesses,” commented John Niehaus, Director of Staffing Services and Human Capital Management for Growth Capital Partners.  “Entrepreneurs should consider picking a specific niche within their industry or region and focus on becoming one of the market leaders in that specialty.”

“Not only will this strategy generate faster sales growth, higher margins, and differentiation from the competition, but it will also facilitate an exit strategy as specialty staffing businesses are more attractive to potential buyers,” continued Mr. Niehaus.  “While M&A activity remains strong for many professional staffing businesses, buyers are especially attracted to high margin niche companies that add a new service offering, new clients, or a new geography to their existing business.”

Among the notable deals announced in the third quarter of 2007, an investment group led by Goldman Sachs Urban Investment Group acquired Nursefinders, one of the nation’s leading healthcare staffing businesses, from Gryphon Investors; Assent Consulting, a provider of clinical research and drug safety staffing, was acquired by Cross Country Healthcare; Lucas Group, an Atlanta-based executive search firm, sold a majority ownership interest to H.I.G. Capital, a private equity firm with recent investments in both Westaff and Insight Global; CDI Corp. announced the divestiture of its $150 million revenue clerical staffing division, Today’s Staffing, in a sale to Spherion for $40 million; and AMR ProNurse, a Chicago-based nurse staffing and allied staffing business, announced that it had been acquired by Medical Staffing Network for $11 million. 

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.

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

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