The number of mergers and acquisitions in the staffing industry pulled back in 2023 after reaching a record level in 2022, according to a new report by SIA.

It counted 116 transactions in 2023, down from 139 in 2022. Rising interest rates seemed to dampen demand during the year, with the low point in the second quarter of 2023 when there were only 21 staffing transactions. However, deal volume recovered in the third and fourth quarters with 29 and 34 transactions, respectively.

Still, despite the ups and downs of 2023, there were more M&A transactions that year than in 2021, when there were 112.

“While staffing M&A activity contracted last year, it still outpaced the overall M&A market as private equity-backed firms continued to pursue acquisitions,” said Kevin Chen, SIA research analyst and author of the report. “We expect similar levels of staffing M&A activity in 2024, with room for improvement if interest rates come down.”

The state of M&A in the staffing industry is also set to be discussed in a panel discussion at Executive Forum North America on March 26 in Las Vegas. SIA Executive Editor Chelsea Emery will lead a panel discussion called “Navigating the M&A Landscape: Best Practices for Maximizing Value.”

Some other findings in the report:

• IT was the most targeted segment in M&A transactions in 2023, with 18% of deals involving the acquisition of an IT staffing provider.
• There were 101 unique buyers in 2023, coinciding with the 116 publicly announced M&A transactions involving North American-based staffing firms. Of these buyers, 84 (83%) were private companies, 12 (12%) were publicly traded, and the remaining five (5%) were private equity firms.

The full report, Merger & Acquisition Trends: North America 2024 Update, is available online to SIA corporate members.

In addition, corporate members can access a database of M&A deals available online.

For more insights into staffing M&A, please see our feature, “Before the deal: What to know about M&A this year.”

-Sanestina Hunter