Growth Capital Partners

PRIVATE BUYERS DRIVING STAFFING M&A ACTIVITY
Growth Capital Partners Reports 22 Transactions in the First Quarter of 2009

HOUSTON, TX, April 7, 2009 – Growth Capital Partners reported today that 22 staffing transactions, completed by 20 different buyers, were publicly announced in the first quarter of 2009. Reported staffing M&A activity gradually accelerated as the quarter progressed and acquisition paralysis began to subside. Four transactions were announced in January, eight in February and ten in March. Seller interest is primarily coming from company owners who are compelled to complete a transaction; either due to excessive debt problems, life events such as retirement or divorce, or an irreversible decline in the performance of their businesses. Buyer interest is almost exclusively driven by smaller privately-held staffing businesses as 21 of the 22 transactions announced in the quarter were completed by either private companies or thinly traded small public entities.

For the first time in many years, commercial staffing suppliers led the transaction activity as 8 clerical and/or light industrial firms were acquired in the first quarter of 2009. Many of these deals were distressed situations as the commercial staffing space has been significantly impacted by the current recession. Within the professional staffing niches, healthcare staffing was the most active sector as 4 deals were completed in the quarter. Within healthcare, locum tenens and allied healthcare continue to be the most sought after disciplines. Finally, although anecdotal evidence suggests that IT staffing has held up better than most staffing segments during this downturn, there was only 1 reported IT staffing deal in the quarter, the lowest amount of activity in this sector since at least 1995.

“An abundance of new buyers are now reporting interest in acquiring staffing businesses as valuations in most niches are at the low end of their historical ranges and larger publicly-held staffing companies have placed their acquisition strategies on hold,” commented John Niehaus, Director of Staffing and Human Capital M&A Services for Growth Capital Partners. “This has created an unprecedented opportunity for well-funded private buyers to acquire excellent businesses that otherwise would be sold to larger strategic buyers or private equity. The key for these new private buyers is to offer fair value for stronger businesses that will likely continue to perform post-acquisition, rather than bottom fish the market for distressed deals that often bring with them other unanticipated problems.”

The SELECT Family of Companies was responsible for three of the most notable deals completed in the first quarter of 2009. SELECT disclosed that it completed its previously announced acquisition of Westaff, a $300 million revenue provider of commercial staffing services. SELECT also reported that it planned to acquire Butler International, a leading national provider of technical and IT staffing services, as well as the temporary staffing assets of Global Employment Holdings, a Colorado-based staffing and PEO business. Other notable deals in the quarter included the announced sale of Gevity HR, one of the nation’s leading Professional Employer Organizations (PEO), to TriNet Group, and Black Letter Discovery was acquired by Joe Amella and Callidus Holdings, a legal staffing and litigation support acquisition platform sponsored by Milestone Partners.

Founded in 1992, GCP 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 at jniehaus@growth-capital.com.

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