U.S. staffing industry M&A activity continued to be impacted by the COVID-19 pandemic, as 115 staffing industry M&A transactions were completed by 96 unique buyers in 2020. This was a 20% decrease from the 143 transactions completed in 2019. 2020 began with a continuance of the strong M&A activity seen over the past five years; however, many potential staffing transactions have now been delayed.
Diminished financial performance during the pandemic (not lower valuation multiples) has created an imbalanced staffing M&A market with more prospective buyers than active sellers in some professional staffing segments. On the buyer side, interest in the sector remains high with an ample number of well-financed acquirers. On the sell side, the reduced number of businesses actively seeking to sell is largely valuation related because earnings (EBITDA) for many are temporarily down.
Strategic buyers accounted for 85% of the staffing industry acquisitions in 2020, with private equity funds (financial buyers) investing in new platform acquisitions accounting for the other 15% of transactions.
Private equity acquired 17 new platform staffing investments in 2020. This follows the 65 new platform investments in the staffing industry made by private equity from 2017-2019.
Even before the pandemic, many of the U.S. public staffing companies were absent from notable M&A activity, as staffing industry acquisition activity remains primarily driven by private equity-owned strategic buyers seeking to scale their existing platforms and create value for future exits.
Read the full report for more details on the U.S. staffing sector, transaction trends and market activity.
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