, and their recently announced intention to take the company public.

In Part 1 of our story, we read that Staffmark is rather bullish and optimistic about the staffing industry in general, and projecting significant growth in the next couple of years.

The fact that they are having a liquidity event also shows optimism in the economy, as an IPO wouldn’t be happening if the owners feel there is a chance the company isn’t going to be valued appropriately.

Part 1 focused more on the good stuff though. And we all know that with the prospect of rewards, there often is risk coming along for the ride as well.

So once again we pored through Staffmark Holding’s SR-1 SEC statement to examine what they cite as the “risk factors related to our business and industry.”

= = = = =

Any significant or prolonged economic downturn could result in our clients using fewer temporary employees and the other services which we offer, terminating their relationship with us, or becoming unable to pay for our services on a timely basis, or at all.

A substantial portion of our revenues and earnings is generated by our business operations in seven states (editor’s note: even though they operate a national network with locations in 31 states).

We are exposed to employment-related claims and costs as well as periodic litigation that could materially adversely affect our financial condition, business, and results of operations.

The temporary staffing industry is affected by seasonal fluctuations which make management of working capital more challenging and could adversely impact our financial position and the market price of our common stock.

We assume the obligation to make wage, tax, and regulatory payments for our temporary employees, and, as a result, are exposed to client credit risks.

Workers’ compensation costs for temporary employees may rise and reduce our margins and require more liquidity.

Our failure or inability to perform under client contracts could result in damage to our reputation and give rise to legal claims against us.

We may not achieve the intended effects of our business strategy.

We may not successfully consummate or initiate acquisitions. There can be no assurance that we will continue to be able to establish and expand our market presence or to successfully identify suitable acquisition candidates and complete acquisitions on favorable terms.

We do not have long-term or exclusive agreements with our temporary staffing clients and our client contracts contain termination provisions and pricing risks that could decrease our revenues, profitability, and cash flows.

The temporary staffing industry is highly competitive with limited barriers to entry, which could limit our ability to maintain or increase our market share or profitability.

Client relocation of positions we filled may have a material adverse effect on our financial condition, business, and results of operations.

Government laws and regulations may significantly restrict our business or increase our costs.

The loss of key members of our senior management team, regional managers, branch managers, and on-site program managers could adversely affect the execution of our business, financial condition, results of operations, and cash flows.

Our business depends on our ability to attract and retain qualified temporary employees that possess the skills demanded by our clients, and intense competition may limit our ability to attract and retain such qualified temporary employees.

Our information technology systems are critical to the operations of the business, and any damage to our information technology systems or data centers could affect our ability to sustain critical business applications.

Outsourcing certain aspects of our business could result in disruption and increased costs.

The conversion of a portion of our information systems to Oracle’s PeopleSoft product may negatively impact our business operations. We are in the process of converting a portion of our payroll, billing, accounts receivable, and front-office information systems to Oracle’s PeopleSoft human resources management system and customer relationship management software. There is a chance of technical issues after conversion that are not detected during the testing phases. These issues can affect both the payroll and billing systems. Any future interruption, impairment, or loss of data integrity or malfunction of these systems could severely impact our business, especially our ability to timely and accurately pay employees and bill customers.

Improper disclosure of employee and client data could result in liability and harm our reputation.

Substantially all of our assets will be pledged as collateral under our New Credit Facility.

There has been no prior public market for our common stock, and one may not develop, and even if it does develop, our stock price could be volatile.

We will incur significant increased costs as a result of operating as a public company, and our management will be required to devote substantial time to new compliance initiatives.

= = = = =

Okay, that’s enough. Some ride, eh kids? Anyone feeling woozy, sick, wanting to get off the roller coaster?

I think I liked Part 1 of this story better, as in the positives. I am fond of saying the positives outweigh the negatives, but guess which list is longer?

So now here’s the backstory.

Founded in Cincinnati in 1970 as CBS Personnel Holdings, the company provided, and continues to provide today, short- and long-term temporary staffing, temp-to-hire and direct hire, and professional placements across a range of industries.

They grew steadily for three decades, eventually attracting a cash-laden suitor in 2000, in the form of a private equity firm from Connecticut called Compass Diversified Trust.

At the time of course, there was a lot of private equity money chasing deals. Private equity funds raised a record $260 billion worldwide in just the first six months of the year 2000.

"Private equity minimizes disruption," Compass CEO Joe Massoud told the Cincinnati Business Journal in 2000. "You build a company that you think of as a child, and you want it to grow. Ten years later, there will still be a CBS Personnel. It won't be a long-lost division of Manpower or something."

No, CBS Personnel wasn’t destined to become a long-lost division of Manpower, that part was true. But the original company name did not last to the end of the decade. In 2009, CBS Personnel  rebranded itself as Staffmark, the name of a competitor it acquired in 2008.

The changes weren’t done though. In 2009, Staffmark promoted former Spherion Senior Vice President Lesa Francis to President three years after joining Staffmark as COO. Then last month she was promoted to CEO, and now this month, the IPO.

The company plans to list on the New York Stock Exchange under the stock symbol “STMK.”

Any takers? The number of shares to be offered and the price range for the offering have not yet been determined.

Tags: IPO, Industry, Stocks, Staffmark, NYSE, CBS Personnel, Lesa Francis, STMK