Given the headwinds, prospective buyers and sellers that embrace the following strategies stand the best chance of coming out on top in 2024, industry experts say.

For Prospective Sellers

Get your house in order. Position for 2025 by hiring outside experts to review your firm’s financials and conduct a quality of earnings assessment, compliance audits and legal assessments. Making corrections now can prevent due diligence surprises and delays.

Invest in technology. Investments in technology can turn an ordinary staffing firm into an attractive target. For instance, online talent platforms will continue to build scale by acquiring traditional staffing businesses. And speed, efficiency and computer-aided compliance will become more critical in driving valuations going forward.

Establish cultural differentiation. Buyers are looking for a differentiated culture that people want to join but which also creates high levels of performance and tenure through internal growth and promotions, says Fairmont Partners Managing Director Andy Brown.

Prevent talent loss. Ensure the continuity and success of your organization by putting non-compete and non-solicitation agreements in place and developing a comprehensive plan to retain key members of your management team.

Become proficient at forecasting. Buyers are willing to reward sellers for predicting a rosy future as long as they aren’t based on gut instinct. Use past and real-time data to predict future supply and demand, pricing and margins on a quarterly basis.

Staffing firms should “build 12-month targets they can stand by,” says Cassidy Leventhal, principal at Achieve Partners. “The average deal process lengthened in 2023, and sellers were able to see more months of performance than the pre-Covid average. If this trend holds, sellers will want to commit to targets that are exciting but achievable and allow them to deliver great news throughout a process.”

For Prospective Buyers

Assemble the right team. Engage investment bankers, attorneys and CPAs who understand the industry’s pricing, competition and margin structure. Know the current market. Determine the fair value of the target company based on its assets, liabilities, financial performance, market position, execution of staffing fundamentals and intangible assets that matter most like culture, leadership and relationships with clients and contingent staff.

Look for alignment on multiple levels. Determine the ideal buyer profile for a prospective asset and whether your company is the right fit. The best M&A deals provide win-win solutions and value for both the buyer and seller.

For the most recent SIA Research report on M&A, please see “Merger and Acquisition Trends: North America 2024 Update.”