STAFFING INDUSTRY ACQUIRERS EMERGING,
BUT NOT THE USUAL SUSPECTS
GCP Reports 18 Transactions
in the Second Quarter of 2009
HOUSTON, TX, July 8, 2009 – Growth Capital
Partners reported today that 18 staffing transactions,
completed by 14 different buyers, were publicly
announced in the second quarter of 2009. For the
first six months of 2009, 40 staffing transactions
have been announced by 31 unique buyers. Industry
M&A activity remains sluggish, primarily because
potential sellers’ pricing expectations are
not aligned with most buyers’ view of the
current marketplace. Seller interest is primarily
coming from company owners who are being compelled
to complete a transaction; either due to unmanageable
levels of bank debt, life events such as retirement,
divorce, or ill health, or as a survival strategy.
Buyer interest is still almost exclusively driven
by opportunistic, privately-held staffing businesses
as 17 of the 18 transactions publicly announced
in the second quarter were completed by either
private companies or very thinly-traded small public
entities.
IT staffing companies led the transaction activity
as 7 IT staff augmentation firms were acquired
in the second quarter of 2009, with firms focusing
on the government service sector showing the
best performance. Commercial staffing accounted
for 6 transactions in the quarter, with many
of these deals being distressed transactions
as the commercial staffing space has been amongst
the hardest hit. Within the other professional
staffing niches, healthcare staffing was the
most active with 2 deals publicly announced in
the quarter. Within healthcare, locum tenens
and allied continue to be the most sought after
service offerings as buyers search for pockets
of growth in this economy.
“Buyers of staffing companies are definitely
out there and deals are being completed, provided
that sellers have the proper valuation expectations
for today’s M&A market,” commented
John Niehaus, Director of Staffing and Human
Capital M&A Services for Growth Capital Partners. “The
larger public staffing companies that historically
have led the industry’s
acquisition activity are only selectively looking
at transactions. For now, a broad selection of
relatively unknown buyers has emerged, providing
viable options for owners who want or need to
execute a transaction.”
Among the notable deals announced in the second
quarter of 2009, Butler International announced
that it had entered into a “stalking horse” asset
purchase agreement with Butler America, LLC,
an affiliate of Steve Sorenson, Chairman and
CEO of Select Staffing, to sell substantially
all of its assets to Butler America in a Chapter
11 bankruptcy sale; General Employment Enterprises,
a small publicly traded IT staffing business,
completed its sale to PSQ, LLC; and Korn/Ferry
International announced its acquisition of Whitehead
Mann, one of the UK’s
best known headhunting firms.
About Growth Capital Partners
Since its founding in 1992, Growth Capital Partners
has provided financial advisory services to private
and public middle-market companies. 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. Through
its GCP affiliate, Southwest Mezzanine Investments (“SMI”), GCP assists
clients with subordinated debt with warrants investments. With $65 million
currently under management, SMI seeks to invest $2 to $6 million in middle-market
companies that are seeking capital to finance internal growth, add-on acquisitions
or to execute a recapitalization.
Source: Growth Capital Partners, L.P.
member FINRA – SIPC
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