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Is Your Staffing Agency Ready For Sale In 2023?

In today’s rapidly changing staffing market, getting your agency optimized for acquisition can be a complex puzzle. It’s a game of understanding shifting market dynamics, leveraging the right technology and understanding how to tell the right story with data.

Rohan Jacob, CEO of ActivateStaff, recently sat down with Matthew Rupprecht (PMCF), an expert in staffing industry mergers and acquisitions (M&A). Matthew shared valuable insights into the current market landscape, the role of technology and the importance of data in agency acquisitions.

The shift in market dynamics in 2023

The 2023 market is very different from previous years. In 2021, there was a flurry of activity in the M&A landscape, with sale opportunities for almost every business out there. But today, as Matthew explained, buyers are gravitating towards companies with proven and efficient systems in place rather than “fixer-uppers.” 

There’s a lot more uncertainty in today’s market and in this unpredictable landscape, not only do more established agencies offer a sense of stability, but those that can stand out with unique qualities become significantly more enticing for acquisition.

The power of technology in creating a saleable agency

The right technology can revolutionize a staffing agency, serving as an important factor in both profitability and desirability in the mergers and acquisitions (M&A) landscape. According to Matthew, “[Firstly], companies that are properly using technology tend to be more profitable, and that has a double positive effect in the M&A environment.” The right technology for your agency can increase profit margins by automating routine tasks, but also paves the way for more efficient and effective business processes.

Matthew emphasizes the importance of well-managed operations, sharing, “[Secondly], companies that are better run tend to have higher EBITDA margins or higher operating margins of the percentage of the revenue.”

In other words, the right technology enables businesses to automate mundane tasks, leaving the human workforce free for higher-value activities (such as relationship building). This shift in operational efficiency can make the agency more desirable to potential buyers.

Proprietary technology is a double-edged sword

While proprietary technology can set a staffing agency apart, it can also present a  major challenge. There is no doubt there is a huge benefit to great technology that works well, but if it’s not already integrated and performing well for your business, it’s not going to help you be saleable.

According to insights from Matthew, “If you don’t already have great technology in place and you’re looking to sell within the next three years, [implementing a homegrown system] is  just going to add a lot of additional work and complexity and risk to that entire process.”

Proprietary technology typically takes years to successfully implement and also a lot of resources to maintain. If systems become outdated or fail to perform optimally, this can lead to complicated decisions about necessary investments and upgrades (most likely meaning that this technology gets stripped out).

Give yourself the power to tell your story using data

Harnessing technology doesn’t just end with the goal of operational efficiency. It’s also about painting a compelling story about your agency through data. “When we get hired by a staffing company that’s looking to sell,” Matthew explains, “one of the biggest things that we want to do is work with the company to tell the company story – what about them makes them unique, special and different – so that we’re able to properly communicate that to a buyer audience.”

Clean, supportive data is key in narrating the unique story of the agency. As a transaction progresses to due diligence, the buyer wants to verify everything. They want data, not just verbal assurances. It’s here that the true value of technology shines through.

Matthew underscored, “People don’t like platitudes. If you say you’re the best, that doesn’t mean anything. We hear the story from management and then try to find whatever data support that exists to support that story.”

In the constantly evolving world of staffing, understanding the market and harnessing technology is no longer a luxury; it’s a necessity. If your agency is still on the path to this transformation, a chat with an industry expert can be a good place to start. Book some time with us.

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