Human Capital Management M&A Pulse – Q3 2023

HUMAN CAPITAL MANAGEMENT M&A MARKET DYNAMICS

• Staffing companies with strong financial performance continue to see attractive transaction outcomes and valuations; however, buyers are increasingly focused on revenue, margin, and earnings sustainability during due diligence. Organizations with limited customer concentration and a proven track record of resilience amidst cyclical pressures can better validate earnings and maintain deal terms throughout the transactional process.
• The ability to harness & adapt to a changing technology landscape has become increasingly important as staffing platform technologies, which accounted for $21 billion of global staffing revenues in 2022, have introduced the advantages of speed, automation, and flexibility which is drawing more attention to the industry. Staffing companies who’ve added automation to their operations are generating stronger buyer interest, commanding premium valuations.
• The credit market is stabilizing after rapid interest rate hikes last year. This is highlighted by the Fed’s recent announcement to maintain current rates and that rate cuts are unlikely to occur until at least 2025. While this drives a higher rate environment than we’ve seen over the last 10 years, it has also led to the emergence of non-traditional lending options which provides prospective buyers with access to a wider range of funding sources with increased flexibility to help bolster an evolving M&A market.