Roll up, but don't roll out - Lessons taught by staffing's M&A history

According to our research on staffing industry's most frequent acquirers, Adecco was the most acquisitive staffing firm in the time period between 2005 and 2009. The company completed 15 deals during this time, not including the MPS Group acquisition. MPS, of course, was not far behind with 14 acquisitions of its own. Manpower came in with eight purchases and Comsys also had a tally of eight deals during these five years.

M&A as a strategy to grow has worked out for quite a few staffing firms. But many M&A experts will tell you that a roll up strategy is not for everyone. Take for example, Resolve Staffing. Technically, Resolve was the biggest acquirer in the staffing industry between 2005 and 2006. A public company until January 2008, the company's lenders sold all of its assets to Koosharem Corp., the parent company of privately held Select Staffing. The deal did not include liabilities. In a filing with the U.S. Securities and Exchange Commission, Resolve said it reached a deal with its bank to foreclose on loan collateral. The deal resulted in the sale of its assets.

Some of us may remember World Health Alternatives, a staffing firm based in Pittsburgh that entered the healthcare arena in 2003. The company acquired six firms in 2004 before its CEO resigned suddenly and some financial discrepancies and other issues came to light. World Health filed for bankruptcy and in 2006, Jackson Healthcare Staffing rescued World Health by acquiring all of its assets and certain liabilities.

So why does the same strategy work for some and not for others? Perhaps it's a matter of how you do it. As a staffing executive whose company was acquired by World Health summed up what went wrong in that roll-up:

"You got people who are not qualified to be in the roles they were in. Then they acquire companies, some of them were good and some may be they paid too much for. They never merged any of their transaction from a back office perspective. They didn't experience any synergies. They borrowed more than what they generated and they allowed that domino effect to swallow up their business integrity."

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