January 9, 2012

Recruit Co. Acquires Advantage Resourcing – Largest Acquisition to Date

Last week, Recruit Co. announced that it had acquired the U.S. and European operations of Tokyo based Advantage Resourcing (AR) from Cerberus Capital Management for $410 million. AR will keep its operations in Japan and its Advantage Federal operations in the U.S. The Advantage Federal business provides staffing, including security-cleared personnel, to firms serving the U.S. government.

The acquisition marks Recruit’s largest transaction to date and its third foreign deal since 2010 as it looks to rapidly increase its global presence beyond the domestic Japanese market. The combined business will have global revenues of $6.8 billion which would now make it the fourth largest staffing company in the world, overtaking U.S. firms, Allegis and Kelly.

Formerly called Radia Holdings Inc., Advantage Resourcing changed its name in early 2010 and divided into four groups: Advantage xPO, Advantage Technical Resourcing, Advantage Professional and Advantage Staffing. The company manages a temporary staff worldwide of 30,000 and directly employs more than 2,000 people.

According to sources, the acquired business lines of AR posted revenue of approximately $1.4 billion in the fiscal year ended June 30, 2011, which implies a valuation multiple of 0.3x revenue. The revenue multiple is in line with what Recruit paid for Staffmark in October 2011. As we have noted in the past, Clearsight expects to see increased consolidation across the staffing sector as the largest staffing firms continue to pursue deals that will move the needle for them through a challenging economic environment.