Is it the Right Time to Buy or Sell a Temporary Staffing Agency?

As firms all across the country have cut their staff and face dwindling revenues, it may seem to be the wrong time to buy a temporary staffing agency. After all, temporary staffing would seem to be among the worst hit industries. However, business brokers who specialize in buying and selling temporary employment agencies believe this conventional wisdom is wrong. While it is true that times are hard for companies all across the country, not all temporary staffing agencies have been affected to the same degree.  Historically, as the economy improves the temporary staffing industry benefits early in the economic recover cycle as a leading indicator.

Since temporary staffing agencies depend on personel demand, the market value of such agencies often depends on the particular industry niche they serve. Many businesses reduce head count significantly, only to discover later on that they have laid off too many people. At that point, these companies are reluctant to initiate the hiring process all over again. Because of this phenomenon, there are many temporary staffing agencies that see increased business during recessions, especially if the agency deals with industries that thrive in the midst of bad economic times, such as health care and bankruptcy support services.

Some business owners worry that the value of their business has been drastically reduced when compared to its’ worth during the recent economic boom. However, the perceived loss that these owners experience from selling their businesses can well be offset by another business or career opportunity that awaits them. In other words, they need to find a way to move on and discover the best and highest use of their time at that point in their lives. If the owner has the right view toward a situation such as this, it does not really matter if the business they are trying to sell has dropped from its former value – the price of another similar business has also dropped by the same ratio. For this reason, while some business owners feel that they should wait until the market improves before they decide to sell, many more are taking the opportunity to sell their current business and invest in a new direction. In many cases, the reduced valuations on the market make this an ideal time to buy a business, especially a temporary staffing agency.  Economic upturns and downturns are part of a natural, unavoidable cycle. Unfortunately, we’ve all recently been reminded of that reality. However, no downturn can last forever. Soon, the economy will start to grow once more. Buying before the growth is apparent affords a business buyer the best opportunity to strike a good deal.

Many business sale transactions are still being completed, even though the terms and conditions of these deals may differ significantly from what they would have been, say, three years previously. Bank funding has dried up to a substantial degree, forcing both sellers and buyers to resort to deferred payment options such as seller financing. In this situation, many buyers have also begun utilizing the services of business intermediaries who can find the good opportunities and understand how to structure a win/win arrangement for the buyer and seller.  As it turns out, this economic environment can be very advantageous for any buyer who is interested in a temporary staffing agency. Sellers realize that their options are limited and that if they do not sell according to a reasonable buyer’s terms, there are many other business owners who will.

The current market presents great opportunities for entrepreneurs and acquisitive companies who understand that this just might be the best time to buy a temporary staffing agency in the next decade.

While the market is ripe for buyers who wish to invest in temporary staffing firm, it is definitely not a good choice for those who have absolutely no experience in temporary staffing.  No matter how good the deal may seem on paper, without solid expertise in operations and marketing, the probability of success is low. Temporary staffing is all about day to day execution, requiring a sense of urgency, efficiency, and resourcefulness that comes from experience.

A key qualification in this industry is being able to effectively deal with people and match them with a set of both technical and cultural customer needs.  The success of a temporary staffing agency is dependent on the expertise of the people working for it. If the buyer does not know how to handle the core employees and how to effectively motivate them, the expected returns can never be realized. If the buyer has no idea how to go about this, they would be well advised to pursue another opportunity. A temporary staffing agency is a place where the abilities to coach, motivate and evaluate people are the key drivers of success. The main asset of the “temping” agency is the talent and dedication of its staff. This is why it is so difficult to carry out the business valuation of a temporary staffing agency in concrete terms. The buyer is, to put it simply, buying people, and before the deal is closed, the entire business must be evaluated thoroughly before funds are committed.

Make sure you retain an advisor who understands how to maximize your opportunity to succeed whether you are selling or buying a business.

Edward Valaitis, CBI – The Certified Business Intermediary designation is your assurance of the highest level of training, expertise and integrity in the business intermediary profession. Mr. Valaitis has more than 25 years of experience building, managing, and leading commercial lending, CPA and consulting firms. Merger and Acquisition services provided throughout Florida. (800) 975-3198

Edward Valatis merger and acquisition

Edison Avenue

Edward Valaitis Managing Director of Edison Avenue has earned his Certified Business Intermediary (CBI), Certified Merger & Acquisition Professional (CMAP), Certified Value Builder (CVB). He has more than 25 years of experience building, managing, and selling companies with expertise in business transactions, business valuations and growing businesses. Business Broker serving the United States based in Tampa and Destin, Florida.