Three Tips for a Successful Staffing Firm Acquisition

Whether to expand geographically, offer new services, better serve current clients and acquire new ones, or a host of other reasons, as a staffing firm owner you may reach a point when you’re ready to consider acquiring a company. Several years ago, for all those reasons, I realized it was time to get serious about an acquisition. It was one of the best decisions I’ve made during my 20+ years of owning and running a professional recruiting and staffing services company.

In our case, a large, national client in the financial services space was growing rapidly in key markets in the Midwest and Southeast. We recognized that we needed to have a presence in the markets where we were recruiting to fill positions. We basically had two options: open our own office with a couple of employees or combine with an established firm in the market. As part of our commitment to providing the highest levels of client service, acquiring a company with a successful track record in the market and an established team was clearly the best choice.

Since that decision, we’ve made two acquisitions over the past three years, taking our company from 23 full-time and 450 temporary employees in 2014 to 95 full-time and 2,950 temporary employees today. This success didn’t happen overnight, though. A lot of time, energy and resources were spent leading up to each deal and then making sure that everything worked well after the two companies came together. Based on what we’ve learned, we’ve developed a three-step process that other owners might want to consider when thinking about an acquisition.

Determine your criteria and stick to it. When looking at a firm to possibly acquire, we consider these factors as mandatory: a like business with strong finances; seasoned, trained internal talent; a client base similar to those we serve in other markets; the firm’s ability to deliver our services to current and new customers; and strong local management teams. Take even one of those criteria out of the mix and the likelihood that the acquisition will succeed drops significantly.

PREMIUM CONTENT: Selling Your Staffing Firm: M&A Advisors, Valuations, List Of Acquirers

Do your due diligence, diligently. Once you’re confident that a company perfectly matches the profile you seek, it’s time to really dig in and look under the hood. A good starting point during this phase is making sure you fully understand the services the company currently provides, especially how they fit with your firm’s offerings and your customers’ needs and expectations. Of course, you’ll need to take a comprehensive, detailed look at the company’s finances, which should include a review of possible scenarios. For example, what happens if a big client leaves or a key employee leaves? Don’t be afraid to ask the tough questions. You and the principals of the firm you’re looking at will be in a much better position to make the right decision by conducting thorough due diligence up front.

Make 1+1= 3. Once you’re comfortable with what you learn during the first two phases, the last step — but certainly not the least important one — is to make sure there’s a good cultural fit between the two agencies and, if so, develop a comprehensive post-acquisition business and operational model. It’s especially important to prepare the existing organizations for working as a combined group. Think in terms of leveraging the strengths of each organization, blending those areas where one company isn’t as strong into the same area within the higher-performing company. Providing employees with the opportunity to learn and grow by working with a team that’s had more success with a particular function or discipline can be highly motivating.

An acquisition can re-ignite a company. Entrepreneurs can become myopic in their thinking once they’ve achieved a certain level of success. The reality is that there are companies out there that do some things better than you do, and vice versa. By bringing together two companies that complement one another and extend the value of each, you can create a new company that delivers benefits and advantages to employees and clients much greater than each firm could realize on its own.

MORE: M&A never goes out of style


Tom Ioele

Tom Ioele
Thomas C. Ioele is chief executive officer of TalentBridge, a staffing, recruiting and talent management company with multiple locations serving clients and candidates throughout the US.

Tom Ioele

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