A great deal of money can be made if you buy a staffing business. Finding the perfect staffing agency for saleĀ can literally land you in a gold mine. Literally? A gold mine? I didn't expect to see staffing agency and gold mine in the same sentence when I looked at the search results that came back when I Google'd "buying a staffing agency."
At any rate, this post is in fact about staffing agencies, and specifically staffing agencies for sale around the country.
For starters, you may be curious about just how many staffing agencies are for sale around the country. Looking at just a pair of sources yielded quite a large number relatively speaking.
BusinessMart.com has 53 staffing companies for sale, and BusinessBroker.net has 146 for sale. The prices range from $55,000 for a franchising concept in Beaumont, Texas, to $6.3 million for a company that provides administrative staffing and technical services to municipal agencies and special districts. That latter business takes in $8.5 million and throws off $3.7 million for the three equity partners. However, 85% of their revenue is derviced from a single client, a municipality in California's Inland Empire.Without any further due diligence, that single caveat is scary enough.
Obviously I didn't look through all of the listings, but I did see enough of them to make some generalizations.
Most of these businesses would be called "lifestyle" businesses. That is, they provide an income (in many cases a very nice income) for the founder/owner, but the sale would not include real estate, intellectual property, or even a book of business. Much of the current business may in fact walk out the door when the owner does.Ā So the intrinsic, or legacy value of the business may not be that great, even though current revenues might actually appear rather strong.
Most of these businesses would be called "lifestyle" businesses. That is, they provide(d) an income (in many cases a very nice income) for the founder/owner, but the sale would not include real estate, intellectual property, or even a book of business.
Talk to anyone in the mergers and acquisition field and they will tell you recurring revenues and a strong leadership team are critical attributes for an acquisition target. In many small businesses, such as these staffing agencies that are for sale, the owner is the business and a transaction that does not include the owner is much riskier, and therefore discounted.
There is a listing however for an Orange County, California niche staffing business that intrigues me, and that you can read here. The company was established in 1992 and provides both temporary and permanent placement personnel for travel agencies and event planners across the country. It currently has four employees, and the business can be run from anywhere in the country using the cloud. The current owner will stay on and train you half-time for 16 weeks, and the agents and current manager have all pledged to stay on to grow the business. The asking price is $800,000 for a $919,000 gross and $305,000 in cash flow. That is the type of small business that could potentially outlive the owner/founder.
Of course there are also a plethora of medium sized legacy staffing businesses for sale, with more employees and bigger books of business that could make them targets to get swallowed up by bigger fish. Consolidation has certainly been the watchword of the industry for some time, although that wave may have subsided with the rebound in business.
We'd like to hear from you. Are you in the mood to buy - or sell? What would prompt you to do either? If you are selling, what do you think someone who buys your business would be getting? If you are buying, what types of metrics and other factors are you looking at?