is presiding over the company’s efforts to go public.

On March 8, Staffmark, one of the top 10 commercial staffing companies in the country, announced Francis’ promotion to Chief Executive Officer after joining the company as Chief Operating Officer from Spherion in 2006. Slightly over a month later, the company announces their intent to sell up to $125 million in an equity offering.

So why should you care if the owners and some senior executives of a staffing company in Cincinnati with a billion dollars in revenue, $15 million in net income, 40,000 weekly temp workers and a client base of 6,000 stand to make more money?

Good question. There are actually a couple of answers. For starters, Initial Public Offerings are often a harbinger of the health of the larger economy. So if some sophisticated and smart people are advising Staffmark this is a good time for an IPO, then it bodes well for all of us (although commissions are involved for the underwriting and so forth, so some of the advice may be biased).

Secondly, and maybe more pertinent to you specifically, the Securities and Exchange Commission Form S-1 that Staffmark has to file in conjunction with the IPO, contains all sorts of due diligence and juicy details about the state of the staffing industry that you might find interesting and/or useful.

And since we assume you don’t have time to pore through the 25-page document yourself, here are some highlights, beginning with a stage-setting overview.

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“Staffing in the United States is a large and growing industry, generating approximately $92 billion in revenue in 2009 and is projected to generate approximately $123 billion in revenue in 2012, representing a three-year compound annual growth rate, or CAGR, of 10%.

Our core markets are the $32 billion light industrial and clerical staffing industries, which together are expected to reach $46 billion in 2012, representing a three-year CAGR of 13%. Two key factors driving this growth are overall economic activity and the ease and flexibility that contingent workers offer to employers.

We provide enterprise-class staffing solutions to predominantly middle-market companies. We believe that the majority of our larger competitors that offer similar services typically focus on the Fortune Global 500, while most of our smaller competitors lack the expertise and infrastructure to deliver the same quality and breadth of services.

We take a consultative approach to our client engagements, devoting significant resources to the upfront assessment and development of customized programs. Once implemented, we conduct regular business reviews with our clients to ensure that the program is performing as intended. We believe our differentiated approach is highly valued by our clients, as evidenced by an average tenure of approximately 10 years among our top 20 clients.

We are focused on establishing and maintaining a leading position within the markets in which we operate. We seek to achieve this by winning our clients’ business one location at a time, and leveraging that success into a broader relationship where we service multiple client locations.

As our client relationships develop, we enhance our position within markets by: (i) hiring additional sales and operations staff; (ii) opening branch and on-site locations; and (iii) making strategic acquisitions. This strategy enables us to gain operating leverage in our markets, raise the awareness of our brand and realize efficiencies of scale.”

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The company states that a large portion of their revenue is derived from the placement of unskilled and semi-skilled temporary workers in the light industrial area. They also offer clerical and specialty workers, direct hire services, employee leasing services and managed services. Those services are delivered through 200 branch offices and 90 on-site locations. The company also uses an output solutions delivery model.

Staffmark is bullish about light industrial and clerical staffing, stating they are among the largest and fastest growing categories within the temporary staffing sector, and they are projecting 15% annual growth from 2009 to 2012.

Their words again…“Industry analysts generally believe that the benefits of a flexible workforce, the rising costs of full-time employees, and the aging United States population will drive secular growth in the staffing sector.”

Here are some more salient points the company makes in closing, in terms of market opportunity.

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“The temporary staffing industry in the United States is highly fragmented, consisting of approximately 9,000 firms. According to the Census Bureau, a majority of staffing firms in the United States generate less than $10 million in annual revenues. In addition, temporary staffing firms with more than 10 branch locations account for less than 2% of the total number of service providers, but generate over 50% of revenues in the temporary staffing industry.

The data suggests there are a large number of small, local, and regional high-quality staffing firms throughout the United States that could serve as potential acquisitions to build market share and geographic density in a cost-effective and efficient manner. We believe this creates a compelling consolidation opportunity for us as there is a limited number of large-scale, nationally-branded temporary staffing companies that are capable of acquiring and integrating sub-scale operators.”

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See that? Staffmark might use some of their new cash to go on a buying binge, and scoop up some small local and regional staffing firms. Interested in selling?

Here is the rundown of growth strategies Staffmark says they will pursue:

  • Increasing revenues and profitability through expansion within existing markets
  • Implementing remote recruiting
  • Promoting differentiated services
  • Pursuing strategic acquisitions
  • Converting local relationships into multi-site accounts

So that’s most of the good stuff, the positive nuggets as far as the industry goes.

And you know there are some negatives to go with that right, some risk factors? Of course.

We will detail those in Part Two, coming tomorrow.

We’ll also tell you the backstory to all of this; plans and changes that were set in motion when a Cincinnati staffing agency called CBS Personnel Holdings sold to a private equity firm in 2000, acquired Staffmark in 2007, rebranded as Staffmark in 2009, and now go public in 2011.

Tags: IPO, Industry, Staffmark, CBS Personnel, Lesa Francis