The staffing industry, including HR outsourcing is the major focus of Meritus’ Mergers and Acquisitions department. Over the past 4 years we have advised buyers and sellers of varying size and specialization, including light industrial, office clerical, medical, accounting and IT.

Consolidation through mergers and acquisitions is a major trend in many industries. A central goal of most mergers has been to improve investment returns through cost cutting, productivity gains, and economies of scale. The staffing industry, characterized by approximately 15,000 small players (less than $20 million in sales) and a few dozen large companies with more than a billion dollars in sales is no exception.

For the large staffing companies, growth through acquisition provides a long list of advantages, including: the opportunity to become more competitive by capturing cost savings from back office operations and worker’s comp, the ability to serve national clients in multiple locations, economies of scale in advertising and marketing. For smaller staffing companies, sale to larger operators can be an attractive proposition for similar reasons.

In recent years, the staffing industry has benefited from a positive operating environment, with all major segments of the industry producing moderate to strong growth. The M&A environment for staffing companies also continues to see increasing activity, as more owners seek to capitalize on improving profitability and realize value through a sale. The result is that currently, valuations in the industry appear to be at a parity point, where neither buyers, nor sellers have the upper hand.