Staffing M&A Activity Continues Despite Slowing Economy

Growth Capital Partners Reports 31 Transactions in the First Quarter of 2008

HOUSTON, TX, April 2, 2008 – Growth Capital Partners reported today that 31 staffing transactions, completed by 28 different buyers, were announced in the first quarter of 2008. While the number of announced completed transactions in the first quarter does not completely reflect the recent up tick in activity, we continue to see strong seller interest as well as a growing number of buyers emerging on the M&A landscape. Despite the slowing economy, transaction activity is likely to remain robust in 2008, especially within the professional staffing segments, as strategic buyers continue to selectively pursue businesses that complement their existing services, customers or geographic reach and private equity groups continue to invest in scalable staffing platforms.

Professional staffing companies continue to see the broadest interest from buyers and still account for the vast majority of M&A activity, as 71% of the announced transactions in the first quarter of 2008 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 locum tenens, physician search, and allied healthcare staffing businesses continue to generate substantial buyer interest as 7 healthcare staffing transactions were announced in the first quarter of 2008. Finally, M&A activity for commercial staffing businesses continues, although at lower multiples and with more opportunistic buyers, with 9 deals announced in the quarter. In the commercial staffing sector, valuation multiples have declined alongside the overall economy, but remain attractive for larger companies still generating growth and having above average gross and EBITDA margins.

“Seller interest among professional staffing company owners is now quite strong, as many staffing businesses have enjoyed several consecutive years of solid growth, increased profitability, and are now better positioned for a potential sale,” commented John Niehaus, Director of Staffing M&A Services for Growth Capital Partners. “However, despite the increase in the overall number of buyers, many of these acquirers have very specific acquisition criteria and are increasingly selective, so it is imperative that an owner conduct a thorough evaluation of the market to ensure that they find the best possible transaction opportunity for their business.”

Among the notable deals announced in the first quarter of 2008, the assets of Resolve Staffing, a Midwest-based provider of commercial staffing and PEO services, were acquired by Select Staffing, a division of The Select Family of Staffing Companies; Major, Lindsey, and Africa, the largest legal search firm in America, was acquired by Allegis Group; MPS Group acquired the assets of Ensemble Chimes Global out of bankruptcy court and plans to operate the Chimes software alongside its own Beeline VMS; Platinum Select, a Dallas-based provider of travel nurse and allied healthcare staffing, was acquired by AMN Healthcare Services; and CBS Personnel Holdings, Inc. announced that it had completed its acquisition of Staffmark Investment LLC, a national provider of light industrial, administrative and transportation staffing.

About Growth Capital Partners
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 M&A practice for Staffing, IT Consulting 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 NASD – SIPC