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April 14, 2000 - Houston - Statistics compiled by De
Bellas & Co., a leading specialty Investment Banking
firm, indicate that 37 staffing businesses were sold
or merged in the first quarter of 2000, representing
a 19 percent increase from the fourth quarter of 1999.
De Bellas & Co. defines a "transaction" as a completed
merger or acquisition or a significant equity investment.
The firm's statistics include domestic as well as cross-border
agreements involving U.S. based participants.
Although the number of transactions has slowed from
the robust staffing market of the last several years,
M&A activity did rebound somewhat from the fourth quarter
of 1999, when only 31 staffing companies were acquired.
Much of this increase was seen in the specialty/professional
staffing sector, as the number of transactions completed
increased 89 percent from the last quarter of 1999.
Of these deals, firms that provide executive search
services saw the most significant amount of activity,
as they accounted for over 41 percent of all activity
within the specialty/professional staffing sector and
19 percent of all deal activity. The most active acquirer
in this niche was TMP Worldwide, Inc. (NASDAQ:TMPW)
which completed four of the seven executive search deals
announced in the first quarter.
In fact, this slight uptick in staffing activity came
despite a decline in overall M&A activity domestically.
According to statistics provided by Thomson Financial
Securities Data, the number of M&A transactions in the
first quarter of 2000 dropped to 2,526, a 5 percent
decline in activity from the immediately preceding quarter
and a 12 percent drop from the year-earlier period when
2,867 deals were announced.
Among the buyers, the top five public staffing buyers
for the most recent six-month period accounted for only
19 percent of all completed transactions. These buyers
included Adecco SA (NYSE:ADO); Kelly Services, Inc.
(NASDAQ:KELYA); Korn/Ferry International (NYSE:KFY);
Technisource, Inc. (NASDAQ:TSRC); and TMP Worldwide,
Inc. Interestingly, over half of all transactions completed
by these top acquirers involved a company providing
executive search services.
Meanwhile, private equity groups and private staffing
companies are playing an increasing role in redefining
the staffing industry, as 46 percent of the deals announced
in the first quarter of 2000 were completed by private
acquirers. In particular, the private equity groups
are actively reshaping the landscape of public staffing
companies through their involvement in a number of significant
deals. Since September of 1999, four public staffing
services companies have successfully been taken private,
another three staffing companies have signed agreements
to be taken private, and two others have either engaged
advisors or publicly announced that they are exploring
strategic alternatives to increase shareholder value.
"The buyer pool has changed significantly over the past
twelve months," stated Rick Wilson, Managing Director
and Chief Operating Officer at De Bellas & Co. "Whereas
the consolidators dominated M&A activity in the past,
today we are seeing a new mix of buyers. Strategic buyers
are doing larger deals, with some add-ons, and are moving
slower and being more selective than ever before. And
the financial buyers are now very active, including
both value-oriented investors in some out-of-favor sub-sectors,
and aggressive price payers in the high-growth specialty
and web-focused areas."
"Based on our surveys of projected buyer activity, we
believe that M&A activity in the staffing industry should
improve as we move into the second half of 2000," remarked
Matt Cothern, an Associate with De Bellas & Co. "In
fact, for some companies, there are more opportunities
now than ever before. We are currently working with
several companies with revenues in excess of $100 million
and expect to see continued deal flow and divestitures
of this size, as many companies are now reevaluating
their business models and exploring divesting their
non-core assets."
De
Bellas & Co. serves as an advisor in all facets of M&A
activity for IT Services and staffing clients. For more
information see www.debellas.com.
US
Staffing Industry
Merger & Acquisition
Activity
|
| |
1st Qtr. 2000 |
4th Qtr. 1999 |
3rd Qtr. 1999 |
2nd Qtr. 1999 |
1st Qtr. 1999 |
Twelve Months 1999 |
4th Qtr. 1998 |
3rd Qtr. 1998 |
2nd Qtr 1998 |
1st Qtr. 1998 |
Twelve Months 1998 |
| Transactions: |
|
|
|
|
|
|
|
|
|
|
|
| Disclosed/Completed
Transactions |
37 |
31 |
51 |
78 |
99 |
259 |
90 |
117 |
126 |
120 |
453 |
| Buyers |
30 |
27 |
39 |
57 |
58 |
128 |
62 |
75 |
65 |
57 |
148 |
| Transactions/Buyers |
1.2 |
1.1 |
1.3 |
1.4 |
1.7 |
2.0 |
1.5 |
1.6 |
1.9 |
2.1 |
3.1 |
| Median
Rev. of Seller (millions) |
9.0 |
17 |
10.0 |
11.0 |
11.0 |
11.0 |
14.0 |
8.0 |
9.0 |
8.0 |
8.8 |
| |
|
|
|
|
|
|
|
|
|
|
|
| Mix: |
|
|
|
|
|
|
|
|
|
|
|
| IT
Staffing |
24.3% |
19.4% |
19.6% |
16.7% |
9.1% |
14.3% |
25.6% |
26.5% |
17.5% |
22.5% |
22.7% |
| IT
Solutions |
13.5% |
29.0% |
19.6% |
25.6% |
31.3% |
27.0% |
30.0% |
19.7% |
34.9% |
18.3% |
25.6% |
| Specialty
Staffing/PEO |
45.9% |
29.0% |
41.2% |
44.9% |
39.4% |
40.5% |
28.9% |
37.6% |
20.6% |
32.5% |
29.8% |
| Traditional
Staffing |
16.2% |
22.6% |
19.6% |
12.8% |
20.2% |
18.1% |
15.6% |
16.2% |
27.0% |
26.7% |
21.9% |
| Total |
100.0% |
100.0% |
100.0% |
100.0% |
100.0% |
100.0% |
100.0% |
100.0% |
100.0% |
100.0% |
100.0% |
| |
|
|
|
|
|
|
|
|
|
|
|
| Geographics: |
|
|
|
|
|
|
|
|
|
|
|
| Domestic |
83.8% |
83.9% |
86.3% |
74.4% |
71.7% |
76.8% |
83.3% |
80.3% |
85.7% |
87.5% |
84.3% |
| Cross
Border |
16.2% |
16.1% |
13.7% |
25.6% |
28.3% |
23.2% |
16.7% |
19.7% |
14.3% |
12.5% |
15.7% |
| Total |
100.0% |
100.0% |
100.0% |
100.0% |
100.0% |
100.0% |
100.0% |
100.0% |
100.0% |
100.0% |
100.0% |
| |
|
|
|
|
|
|
|
|
|
|
|
| Ownership: |
|
|
|
|
|
|
|
|
|
|
|
| Public |
54.1% |
64.5% |
62.7% |
67.9% |
62.6% |
64.5% |
73.3% |
70.9% |
81.0% |
85.8% |
78.1% |
| Private |
45.9% |
35.5% |
37.3% |
32.1% |
37.4% |
35.5% |
26.7% |
29.1% |
19.0% |
14.2% |
21.9% |
| Total |
100.0% |
100.0% |
100.0% |
100.0% |
100.0% |
100.0% |
100.0% |
100.0% |
100.0% |
100.0% |
100.0% |
Source: De Bellas & Co., SEC filings, Staff Facts
and Staffing Industry Report
Note: IT Solutions transactions are those transactions
completed by a staffing buyer and an IT Solutions
seller.
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