Merger and acquisition volume in the staffing sector remains strong, with approximately 60 notable transactions recorded year-to-date. The IT/Professional Services segment remains the most active segment, with 34 transactions in the first half of 2012. Healthcare is still lagging the rest of the pack with only eight transactions. Managed service providers (MSPs) and vendor management system (VMS) providers remain highly sought after by private equity firms looking for technology-enabled offerings with more predictable revenue patterns. In 2011, Fieldglass, Comforce (ProUnlimited) and ZeroChaos were recapitalized by private equity firms. WorkforceLogic was acquired by ZeroChaos in 2012. We see this trend continuing as penetration rates of VMS and MSP players continue to rise.
The most notable staffing transaction of 2012 has been the acquisition of Apex Systems by On Assignment. Apex, an IT staffing provider based in Richmond, Va., concluded a 15 year run by selling for more than $600 million, representing a 9.2x multiple on trailing twelve month EBITDA. On Assignment’s stock price has increased 112.5 percent over the last 12 months and is up 20.6 percent since the announcement of the acquisition.
Meanwhile, the major staffing firms such as Adecco, Randstad and ManpowerGroup have been quiet on the M&A front of late as they continue to digest past, large acquisitions and have somewhat greater exposure to Europe than the midsize U.S. staffing firms. Recruit, based in Japan, has bought StaffMark and Advantage and now has over $2 billion in U.S. revenue. Midsize acquirers such as Global Employment, Artech and Addison continue to be active on smaller transactions. As the major firms complete their integration, we believe that they will again seek acquisitions to fill out their service line offerings and to increase their margin profiles.
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