DESPITE CHALLENGING
OPERATING ENVIRONMENT, SELECTIVE STAFFING M&A
ACTIVITY CONTINUES
Growth Capital Partners Reports
97 Transactions in 2008
HOUSTON, TX, January 8, 2009 – Growth
Capital Partners reported today that 97 staffing
transactions were announced in 2008 by 78 different
buyers, representing the lowest number of staffing
deals completed since 2001. This is generally
reflective of a worldwide economic environment
that worsened as the year progressed. The number
of reported transactions across the staffing
industry also declined on a quarterly basis as
2008 progressed, with 31, 27, 26 and 13 transactions
announced in the four quarters of 2008, respectively.
Transaction activity across all industries is
likely to remain sluggish during the first half
of 2009 as constraints on debt financing and
general uncertainty over the length and depth
of the current recession are prompting many buyers
and sellers to take a wait-and-see approach to
acquisitions. However, cash-rich privately-held
acquirers and other international buyers remain
active on the acquisition trail, as evidenced
by the staffing and government services transactions
that are still being completed in situations
where the right strategic fit can be achieved.
Professional services companies continue to
see the broadest interest from potential buyers
and still account for the vast majority of M&A
activity, as 79.4% of the announced transactions
in 2008 involved these specialty staffing firms.
Healthcare staffing was the most active sector
for staffing M&A activity this year, as 22
medical staffing deals were completed in 2008.
Within healthcare, locum tenens and allied healthcare
continue to be the most sought after disciplines.
Interest from acquirers also remained strong
for certain firms in the IT staffing sector,
especially for firms in the Government Services
space, as 14 IT staffing acquisitions were completed
in 2008.
“Despite challenges in the credit
markets and an economy in recession, many buyers
continue to report an interest in pursuing selective
acquisitions, especially in the areas of IT services
to the federal government, recruitment process
outsourcing (RPO), locum tenens, legal staffing
/ e-discovery services and finance/accounting
staffing,” commented John Niehaus, Director
of Staffing and Human Capital M&A Services
for Growth Capital Partners. “As
2009 progresses and the credit markets improve, buyers and sellers alike should
have better visibility and confidence in their earnings projections, leading
to a gradual strengthening in the overall M&A market.”
Among the
notable deals reported in the fourth quarter
of 2008, Westaff, Inc. announced that it was
evaluating an offer to be acquired by Koosharem
Corp., the parent company of Select Staffing,
for approximately $1.25 per share; Serco Group,
plc completed the acquisition of SI International,
a $500+ million revenue provider of information
services, technology, and network solutions to
the U.S. government; dnovus RDI, a $32 million
supplier of IT services to the federal government,
was acquired by Kforce, Inc.; National Technical
Systems, a leading provider of engineering and
evaluation services, sold its IT staffing business
to Strategic Staffing Solutions, Inc.; Randstad
Holding NV announced that it acquired a 10% stake
in Japanese staffing firm FujiStaff Holdings,
Inc.; and the management team of Pro Staff, a
Minneapolis-based professional staffing firm,
acquired the company from the estate of Pro Staff
founder Jeff Dobbs and his brother, Doug Dobbs.
About Growth Capital Partners
Founded in 1992, GCP (www.growth-capital.com)
is an investment and merchant banking firm that
provides financial advisory services to both
private and public middle-market companies, with
a specialty practice devoted specifically to
the Human Capital Services industry. GCP
also focuses extensively on the private equity
marketplace. Since its inception, 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 M&A transactions
with an aggregate value in excess of $4 billion.
For more information on Growth Capital Partners’ services,
including its specialty M&A practice for
Staffing, IT Consulting and Human Resource Outsourcing
companies, please contact John Niehaus.
For Additional Information, Please Contact:
Growth Capital Partners, L.P.
John Niehaus
(281) 445-6611
jniehaus@growth-capital.com
Source: Growth Capital Partners, L.P.
member FINRA – SIPC
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