Staffmark Acquired by Japan’s Recruit Co. for $295 million

Foreign buyers have been actively looking at domestic staffing businesses and Japan’s Recruit Co. LTD. just announced its $295 million acquisition of Staffmark, a 40 year old $1 billion Cincinnati, Ohio-based staffing business.Recruit Co. has vaulted itself to the fifth largest staffing business globally and established a meaningful presence in the U.S., the largest staffing market in the world. Staffmark’s owners, Compass Diversified Holdings, had been considering an IPO for the past 12 months and reportedly has had considerable interest once they filed for an IPO earlier in the year. Recruit Co. was attracted to Staffmark because of the company’s brand recognition and recent growth, which has been well above the market as a whole. The deal was struck at 8.2x EBITDA and 0.3x revenue, a good valuation for a lower margin staffing business, clearly signaling that those staffing companies in the middle market that have between $200 million – $1 billion of revenue, make attractive opportunities for the largest firms.

This deal comes on the back of Adecco’s acquisition of MPS Group for $1.3 billion, Manpower’s acquisition of Comsys for $414 million and Randstad’s acquisition of Spherion for $742 million. Clearsight expects to see continued consolidation as the largest staffing firms need to pursue deals that will move the needle for them creating excellent exit opportunities for firms that have established scale and have set themselves apart by growing through what has been a challenging economic environment.