HUMAN CAPITAL MANAGEMENT M&A MARKET DYNAMICS
- A theme of “specialization” emerged in 2023, with IT and Place & Search representing the most active staffing sectors throughout the year. The number of staffing targets serving both professional and commercial segments fell 42% versus 2022, with active buyers electing to pursue professional-only or commercial-only targets. Additional popular segments include Finance & Accounting, Legal, Engineering, Life Sciences, Education, and Marketing.
- 2024 is providing reasons for optimism in a Staffing M&A environment that’s demonstrated volatility over the past 12 months. Private Equity possesses abundant dry powder which must be deployed, there’s a continued momentum for smaller transactions after significant add-on activity in the latter half of 2023, and converging price expectations between buyer and seller amidst a normalizing valuation environment presents opportunity for more deal closures.
- After a flurry of M&A activity in 2021 & 2022 with abnormally high EBITDA multiples, buyers remain concerned about overpaying for staffing acquisitions and are lengthening the diligence process by up to 60 days. Buyers are also offering higher levels of earnout and expecting sellers to carry notes as opposed to approaching banks. On the opposite side, sellers of strong companies with proven performance and a defensible niche maintain significant leverage.
