In honor of the Staffing Industry Analysts Executive Forum taking place in Orlando this week, today’s blog post features some practical advice for owners of staffing firms looking to take advantage of market conditions and execute on a growth or exit strategy.
According to the January 2015 Duff & Phelps Staffing Industry M&A Landscape report, there were 105 M&A transactions completed in 2014, a slight increase from the 103 transactions in both 2013 and 2012. With activity staying steady over the last three years (after jumping from 59 transactions in 2011), staffing companies can feel confident moving forward with an acquisition or exit strategy in 2015.
However, whether you are looking to grow your firm through acquisitions or sell your business this year, there are a few things you need to consider before moving forward.
If you’re planning to grow through acquisitions:
Before you can successfully execute on an acquisition strategy, you need to consider the following:
- Have you developed a 3-5 year strategic growth plan and criteria of companies you want to buy?
- Have you assessed your company’s readiness to absorb an acquisition?
- Have you completed the financial projections and do you have the cash required to purchase and run an acquisition?
- Have you secured a means of funding acquisitions, structuring and negotiating the purchase, developing purchasing documents and the due diligence of the business?
- Have you designated how and who will handle the integration of your acquisitions?
If you answered ‘no,’ ‘maybe’ or an uncertain ‘yes’ to any of these questions, take a step back and reconsider your strategy. Not having a clear understanding of these items could result in a failed acquisition or even worse, cause irreparable damage to your existing company.
If you’re planning to sell your business:
Before you move forward, consider this: the market might be ready to buy, but is your business really ready to sell? Take an honest assessment of the following questions to ensure your business is ready for sale:
- Can you get the money you need from a sale in this market?
- Is your business positioned to maximize sale value? Do you have a competitive differentiator in your marketplace (higher than industry margins, specialized product/service offering, etc.)?
- Is your organization set up to easily assimilate into an acquiring company?
- Are you positioned to be a platform company that can be scaled rapidly?
- Do you have strong second tier management capable of running the business?
- What is the dollar amount you want out of the sale? It’s important to know what the market is paying for your exact business and set realistic expectations regarding sale amount.
Address these questions before moving forward to guarantee a successful sale process and get the maximum value for your business.
Ultimately, whether your goal is to grow or sell your business, you need the right outsourcing partner to help you properly execute on your business strategy. With involvement in more than 400 mergers and acquisitions on both the buyer and seller side, RVR senior leaders have “been there and done that.” We have a comprehensive understanding of the staffing industry and are uniquely positioned to help you accomplish your strategic/tactical goals. We take on the “heavy lifting” associated with this effort and get you set-up for success in 2015, while you continue to focus on running your business.
RVR can provide support for:
- Due Diligence
- Exit Strategy
- Contract Negotiations
- Post-Transaction Integrations