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Staffing Business For Sale

Written by StaffingTalk

A great deal of money can be made if you buy a staffing business. Finding the perfect staffing agency for sale 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.”Staffing Business For Sale

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. 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?

{ 15 comments… read them below or add one }
  1. Buy What?

    What are you getting then if the owner leaves with his/her book of business? What are some actual prices paid recently for staffing companies?

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    • JC

      If you have a good business rep to negotiate the transaction, you could present said “owner” with a binding contract to protect yourself from such a scenario. In Omnia Paratus Business Services can help you with this. Email us at covingtoncompaniesinc@gmail.com for a free quote.

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  2. SimpyBiz

    I just couldn’t leave your website before telling you that we truly enjoyed the unique and quality information you offer to your customers…… Will be back often to check up on new an additional posts.
    Have a wonderful day!
    SimplyBiz

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  3. Greg Clowminzer

    As a business coach I am always looking for good content for my clients. I have several clients looking at the possibility of buy a franchise or existing business. I like the revenue of the staffing company’s but have some concerns with purchasing for some of the same reasons you mentioned in your article.

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  4. Dennis Foster

    I am selling my legal staffing business. Fortunately, I learned long ago that I need to be in the background of the business to position it for sale, and thus, my recruiters and staff are the “face” of the company for our client contacts and our candidate contacts. This is critical to maximizing your return at sale. I guess I’ll see!
    Dennis Foster
    Cleveland Ohio

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    • Gary A.

      Dennis; You are correct. We are currently consulting with a medical staffing business whose owner has done a great job moving the customer relationships to the sales and operations teams, thereby creating an entity that is not dependent upon him. This has added a significant amount of value to the transaction price. Strategic buyers are still requesting that the deal be structured with a partiaon earn-out, but since we can argue that his role in the business is truly ambassadorial, we are able to minimize the earn-out and his responsibilities beyond “effective transition.”
      Interested in how your deal is going – or has gone.
      Thanks,
      Gary A.

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  5. Mike Wallace

    Please contact me with any staffing agency businesses for sale in Arkansas.

    Thank you

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  6. hemant

    need help to start staffing company in Detroit. some steps, software tools and need processes. 734-658 -3474 please help

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  7. Gary A.

    Great article, ST!
    We work with staffing business owners to help them optimize profitability and prepare their business for sale at maximum value. Top five keys to maximize value for transaction are as follows (not in any particular order): 1. develop a business that is not dependent on you – hire great people and empower your team with critical customer relationships; 2. limit exposure to customer concentration issues; 3. run a clean set of books – and get the reviewed or audited (depending on business size – audit over $5M n revenue) for two years prior to a transaction; 4. grow and position your business to be appealing to a strategic buyer rather than a lifestyle buyer and 5. be able to demonstrate an outstanding track record for any regulatory compliance in your industry and 6. be able to demonstrate greater than average retention numbers – both clients and resources.
    I know, I promised the top five, but all six are very important.
    Gary A.

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    • Alejandro

      Good synthesis. A certain commitment of the owner is key, to ensure a seamless transfer of business.
      We are looking for an IT Staffing company in Mass,
      Any help?

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  8. Joshua

    We are interested in selling our nationwide staffing agency. Originally founded with a focus solely on construction, Zimmermann Staffing diversified in 2012 from skilled trades to all sectors.

    This decision is due to our primary business owner falling very ill in late 2012.

    Our firm is five years old, can be operated from anywhere in the world and has a turnkey system in place that allows nationwide services to be rendered from a single location.

    j.ahles@zimmstaff.com
    850-628-9129

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