Valuation Update for the Staffing Industry

December 31, 2009
According to the Bureau of Labor Statistics, the November unemployment rate declined to 10 percent, down from 10.2 percent in the prior month. Nonfarm payrolls declined 11,000 in November, representing the smallest decline since the start of the recession. Employment in the services sector, which is the main source of U.S. jobs, increased by 58,000 in November. However, this was offset by manufacturing companies losing 41,000 jobs and construction companies cutting 27,000. The total decline in payrolls represents a significant improvement over the past year. Between November 2008 and April 2009, the economy lost an average of 645,000 jobs a month. Between May and July, the pace declined to an average monthly loss of 357,000 jobs, while during the past three months, the average monthly job losses have decreased to 135,000. The decline in the unemployment rate is a potential sign that employee productivity has reached a peak and businesses are requiring additional personnel to meet increased demand. The recent slowdown in job losses has prompted some economists to forecast that job creation will return in the first quarter of 2010.

Staffing industry consolidation continued at a modest pace during the fourth quarter of 2009, with companies continuing to expand geographically and broaden their service offerings.

The following are among the notable transactions announced in the staffing sector during the fourth quarter of 2009:

• Private equity firm Cerberus Capital Management, L.P. and staffing firm RADIA International announced the acquisition of Willstaff Worldwide, Inc. for an undisclosed amount. Louisiana-based Willstaff provides temporary and permanent placement staffing services specializing in light industrial, construction, administrative and clerical, and customer service positions. Netherlands-based RADIA International, which provides professional, commercial, and technical staffing services throughout North America and Europe, made the acquisition to strengthen its position in the Southern United States. (Source: RADIA International press release, December 11, 2009)
  
  
• Contract engineering, technical, and professional staffing services provider Johnson Service Group, Inc. announced the acquisition of TechSource, Inc. for an undisclosed amount. Pennsylvania-based TechSource provides technical engineering staffing services to clients in the Northeastern United States. Johnson Service Group, which primarily operates in the Midwest and Southeast, made the acquisition to strengthen its engineering staffing services and expand geographically. (Source: Johnson Service Group, Inc. press release November 23, 2009)
  
  
• Executive search and consulting services provider Prolaurum SA announced the acquisition of Comella Consulting Group. Miami-based Comella provides executive search services focused primarily on the financial services sector. Argentina-based Prolaurum made the acquisition to expand its position in the U.S. market and strengthen its executive search capabilities in the financial services sector. Terms of the transaction were not disclosed. (Source: Prolaurum SA press release, October 29, 2009)
  
  
• Wales-based Time 4 Recruitment Limited announced the acquisition of Marble Recruitment Solutions for an undisclosed amount. Marble Recruitment focuses primarily on permanent placement staffing services for the sales and marketing and office administration sectors. Time 4 Recruitment, which offers temporary staffing to a variety of sectors, made the acquisition to expand into permanent placement services. (Source: Time 4 Recruitment Limited press release, October 19, 2009)
  
  
In these challenging times, business owners should seek objective advice from qualified professionals. Our staffing industry bankers and special situations advisory specialists would welcome the opportunity to meet with you on a confidential basis to learn more about your firm's strategic objectives, and help you explore all liquidity options available in the market today.