Growth Capital Partners Reports 79 Transactions in the First Nine Months of 2008

HOUSTON, TX, October 7, 2008 – Growth Capital Partners reported today that 25 staffing-related businesses were sold or merged in the third quarter of 2008.  For the first nine months of 2008, 79 transactions have been reported.  While the number of completed staffing transactions year-to-date has declined 32% vs. the same period in 2007, M&A discussions within the industry remain quite active with many potential sellers evaluating their strategic alternatives.  Furthermore, an influx of new acquirers, including a growing number of foreign companies, are actively seeking attractive acquisition targets in the staffing industry.

Professional staffing companies continue to see the broadest interest from potential buyers and still account for the vast majority of M&A activity, as 84% of the announced transactions in the third quarter of 2008 involved these specialty staffing firms.  Healthcare staffing once again leads the M&A activity this quarter, as 7 healthcare staffing transactions were completed.  Within the healthcare sector, locum tenens and allied healthcare continue to be the most sought after staffing disciplines.  Within the IT staffing space, companies having either significant scale, strong direct customer relationships or very strong gross margins are driving buyer interest, as 4 transactions were publicly reported in the quarter.  Buyers also continue to report a strong interest in acquiring both leading finance & accounting and legal staffing companies.  Finally, M&A activity for light industrial and administrative staffing businesses remains sluggish with 4 transactions publicly announced in the quarter.  In this commercial staffing sector, targeted geographic acquisitions or larger platform light industrial or administrative staffing companies that are still showing revenue growth or generating above average gross and EBITDA margins are the most sought after.

“Despite the uncertain U.S. economic environment, staffing industry transactions are still being completed and buyers continue to search for attractive acquisition opportunities,” commented John Niehaus, Director of Staffing M&A Services for Growth Capital Partners.  “While the larger, publicly-traded U.S. staffing companies have become increasingly selective on the M&A front, many new privately-held domestic acquirers, as well as a new group of foreign-based buyers, are emerging as legitimate options for staffing company owners seeking liquidity or hoping to align with a larger entity.” 

Among the notable deals announced in the third quarter of 2008, Staff One, Inc., a leading Professional Employer Organization (PEO), was acquired in a recapitalization transaction by Gordian Capital;  Medical Doctor Associates, one of the nation’s leading locum tenens and allied healthcare staffing firms, was acquired by Cross Country Healthcare;  CHG Healthcare Services bought AHR Pharmacy Solutions, a California based pharmacy staffing business;  Quality Technical Services, a provider of engineering staffing services, was acquired by Modern Professional Services; and The Hobart West Group, a provider of court reporting, legal staffing and administrative staffing services, announced that it had been acquired by Alexander Gallo Holdings.

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 250 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 $4.0 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.

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

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