1. business and industrial
2. business operations
3. human resources

Headwaters MB
Industry Overview
A company’s employees are key strategic assets and, as a result, staffing
strategies provide significant competitive advantages to employers. The
cyclical $416bn global staffing industry includes professional staffing which is
driven by rapid technological change, scarcity of skilled labor, and the need
for flexible staffing solutions. Categories such as IT, which require skilled
technical expertise, will benefit from these trends.
In the US, 3 million people (2% of the workforce) are employed via staffing
agencies, which at $131bn in 2013 is also the largest single staffing market
globally. The U.S. staffing industry is forecasted to grow 6% in 2014 to $139.4
billion. As the industry evolves into faster growing categories--such as IT-cyclicality will become more moderate.
Source: Wall Street Research – October 2014
pg. 1
IT Staffing Industry Overview
IT staffing is driven by:
• Rapid technological change drives companies to seek flexible workforces
• Increasing scarcity of math and science skills as demand for talent outpaces
supply.
IT staffing benefits from a large market ($23bn), low unemployment, high
temp penetration (5.1%), strong growth prospects and an attractive average
hourly rate, 2.1x above the US average hourly rate. According to the US
Bureau of Labor Statistics’ Occupational Outlook Handbook, employment in IT
professionals is expected to increase 22% from 2010 to 2020, far outpacing
the 14% growth in all occupations in the US during the same time period. In
addition Staffing Industry Analysts (SIA) expects IT staffing to continue to
grow above most other categories over the next 2+ years.
IT
Value
Rank
Value
2nd
9
4th
Unemployment (%)
3.9%
3rd
4.8%
5th
Temp Penetration
5.1%
2nd
1.4%
6th
23%
8th
11%
6th
Firms Prov. Svc. (%)
40
Rank
23
Market Size ($bn)
Staffing Segment Market Size and Growth
2012-2014E
Healthcare
LT Empl. Growth
22%
2nd
29%
1st
Average Hourly Rates
2.1x
2nd
1.4x
7th
35
30
Size ($B)
Discipline
Industrial
Office &
Clerical
IT
25
20
15
Engineering
10
5
0
3.00%
Finance &
Accounting
Legal
4.00%
5.00%
6.00%
7.00%
Healthcare
8.00%
9.00%
Growth %
Source: Wall Street Research
pg. 2
Staffing M&A
In 1H 2014 there were 56 transactions completed, a 14% increase in the number
of transaction compared to the first half of 2013
Notable Transactions:
1. HireStrategy, a professional staffing firm serving the Washington DC
market, was acquired by Addison Group, a portfolio company of
Trilantic Capital Partners
2. Seaton Corp., a portfolio company of Leeds Equity Partners, was
acquired by TrueBlue Inc. for $310 million
3. Artech Information Systems LLC, a multi-national staffing and
professional services, acquired professional services firm Vega
Consulting LLC
4. Vonlay, LLC, a leading provider of healthcare IT consulting was acquired
by Huron Consulting Group and will become a part of Huron Healthcare
Yearly Staffing Transaction Volume – 2004 to June 30, 2014
Source: Capital IQ
M&A Activity In the Staffing Industry Has Increased Dramatically Since The Trough in 2011
pg. 4
Staffing M&A
M&A Activity by Staffing Industry Sector - YTD June 30, 2014
Source: Capital IQ
Information technology staffing companies continue to experience widespread demand and strong valuations, with
certain areas of healthcare staffing and light industrial staffing also creating broader interest from buyers.
While buyers of staffing businesses continue to be selective, those companies with a history of strong revenue growth,
high profitability, diversified customer bases and outstanding management teams committed to staying with the
business post-transaction continue to fare well in the staffing M&A marketplace.
Staffing Industry Transaction Activity – YTD June 30, 2014
Source: Capital IQ
Acquisition activity remains primarily driven by privately held strategic buyers (many backed by private equity), as the
larger public staffing companies account for only a handful of transactions each year. In the first half of 2014, nearly 79%
of the transactions were completed by privately owned buyers.
Private equity buyers remain a viable option for the largest and fastest growing staffing companies, with 4 new platform
investments made in the first half of 2014. This follows the 9 new staffing platform investments acquired by private
equity groups in 2013 and 25 total since the beginning of this acquisition cycle in 2012.
pg. 5
Publicly Traded Comparables
12-Month Indexed Stock Price Performance of General and IT Staffing Companies
20.0%
15.0%
10.0%
5.0%
0.0%
-5.0%
8% S&P 500
-1% IT Staffing
Composite
-3% Russell 2000
-10.0%
-15.0%
-14% General
Staffing Composite
-20.0%
General Staffing Composite includes: Adecco (SWX:ADEN) Randstad Holding
(ENXTAM:RAND), Robert Half International (RHI), ManpowerGroup (MAN),
Michael Page International (LSE:MPI), On Assignment (ASGN), TrueBlue (TBI),
Kforce (KFRC), Kelly Services (KELY), and CDI Corp. (CDI)
IT Staffing Composite includes: RCM Technologies (RCMT) and Volt
Information Sciences (OTCPK:VISI)
pg. 6
Precedent Transactions
Staffing Transactions 2008 - Present
Large Staffing Deals >$80MM
Date
2-Jun-14
2-Dec-13
31-Oct-13
25-Mar-13
15-May-12
6-Sep-11
26-Jul-11
20-Jul-11
11-Dec-09
31-Aug-09
11-Aug-09
16-Apr-09
1-Apr-08
Target
Buyer
Target Description
Seaton L.L.C.
CyberCoders, Inc.
Alexander Mann Group Limited
Intelligence, Ltd.
Apex
Paracon Holdings Ltd.
Drake Beam Morin
SFN Group
Koosharem Corporation
MPS Group
Spring Group
Corporate Services Group
Vedior
TrueBlue
On Assignment
New Mountain Cap.
Temp Holdings
On Assignment
Adcorp Holdings
Adecco
Randstad Holding
Atlas Acquisition Holding
Adecco
Adecco
Impellam Group
Randstad Holding
General Staffing
General Staffing
General Staffing
General Staffing
IT Staffing
IT Staffing
General Staffing
General Staffing
Mixed Staffing (deal did not close)
Specialty Staffing
Professional Staffing
Broad Range of Staffing
International Staffing Services
Trans.
Value
$460.1
105.0
417.4
723.2
600.0
94.0
214.7
771.0
840.0
1,165.0
97.5
1,786.3
5,138.0
Mean
Median
954.8
600.0
($ in millions)
TV/
TV/
Rev.
EBITDA
0.7x
--1.0x
0.9x
0.6x
-0.4x
0.1x
0.7x
0.1x
0.1x
0.5x
22.1x
---9.2x
7.3x
-11.2x
9.2x
14.4x
17.4x
5.9x
17.4x
0.5x
0.5x
12.7x
11.2x
Small Staffing Deals <$80MM
Date
3-Apr-14
3-Feb-14
3-Feb-14
23-Dec-13
11-Dec-13
10-Dec-13
2-Dec-13
24-Oct-13
2-Oct-13
30-Aug-13
28-Aug-13
26-Jun-13
1-May-13
11-Apr-13
27-Mar-13
12-Dec-12
20-Sep-11
19-Aug-11
6-Jun-11
4-May-11
11-Apr-11
28-Feb-11
1-Feb-10
17-May-09
20-Mar-09
26-Dec-08
30-Jan-08
Trans.
Value
Target
Buyer
Target Description
Kelly Group
TekMate
Staff Management Group
Work Service Spólka Akcyjna
C.C. Consulting K.K.
Staffing 360 Solutions Limited
Whitaker Medical, Ltd.
Hospitality Staffing Solutions
Madison Recruitment & Madison Force
Bar 2 Limited
Analysts International Corp.
Armstrong Craven Limited
InStaff Personnel, LLC
Navigos Group Ltd.
Cyber 360 Solutions
Paxus Australia Pty
Todays Staffing
SSR
A-1 Staffing
Network Professional Recruitment
Sheridan Maine
CXI
Tatum
Global Tek, Lehka & BPM
Walnut Creek
East-West Staffing
Resolve Staffing
Adcorp
Alaska Communications Systems
Diamond Staffing Services
unknown
JAC Recruitment Co.
Staffing 360 Solutions
VISTA Staffing Solutions
Caymus Equity & Littlejohn
AWF Group Limited
Procap Services Limited
American CyberSystems
ISIS Equity Partners
LTN Staffing
en-japan
Staffing 360 Solutions
Adcorp Holdings
Spherion / SFN Group
Network Group
TrueBlue
Network Group
Network Group
Stefanini
SFN Group
VantageForce
Koosharem Corp.
Koosharem Corp.
Koosharem Corp.
Staffing and Other HR services
IT Staffing and Consulting
General Staffing
IT Staffing
Bilingual professional Staffing in Japan
General Staffing
Healthcare Staffing
Healthcare Staffing
General Staffing
General Staffing
IT Staffing
Executive Staffing
General Staffing
Executive Staffing
IT Staffing
IT Staffing
Legal and Financial Staffing
Security Staffing
Industrial Staffing
Financial Staffing
Financial Staffing
70% IT Staffing/ 30% Pro. Svcs
CFO Staffing
IT Staffing
Commercial Staffing (distressed)
Commercial staffing
PEO Staffing
Mean
Median
TV/
Rev.
TV/
EBITDA
$26.2
1.5
10.0
10.3
6.4
16.7
22.5
22.9
29.8
1.2
33.6
4.3
13.8
22.1
2.8
62.9
40.0
1.4
-0.1
0.7
16.0
46.0
-54.0
19.0
25.0
0.1x
0.2x
0.1x
1.0x
2.1x
0.2x
--0.6x
0.5x
0.3x
-0.3x
3.9x
0.5x
-0.3x
-----0.4x
-0.2x
0.1x
0.1x
9.3x
-----------8.4x
---------5.5x
-----
19.6
16.7
0.6x
0.3x
7.7x
8.4x
(1)
Source: Compa ny pres s rel ea s es a nd SEC fi l i ngs .
(1) Incl udes a djus tment of $6M i n cos t s ynergi es .
pg. 7
Industry Experience
*Some transactions completed by Headwaters team members on prior platforms
pg. 8
About Headwaters MB:
Headwaters MB is an independent, middle-market investment banking firm providing strategic merger and acquisitions,
corporate finance services and merchant banking through proprietary sources of capital. Headwaters is headquartered in
Denver, CO, with 6 regional offices across the United States and partnerships with 18 firms covering 30 countries. For more
information, visit www.headwatersmb.com and keep up with us on Twitter at twitter.com/brendanburke.
The firm has an established reputation as a quality service provider and trusted long-term advisor to clients with a history of
process and transaction excellence. For more information about Headwaters’ Business Services Team please contact a
member of our team:
Business Services: Staffing Industry Team
Bob Balaban
Chad Gardiner
Managing Director
720.792.9400
bbalaban@headwatersmb.com
Vice President
720.310.0403
cgardiner@headwatersmb.com
• 25 years of investment banking and operating
experience.
• Served as the lead banker on over 75 transactions
primarily in the business services marketplace.
• Involved with over a dozen startup companies,
including Great Plains Accounting Software, Inc.
• 12 years of experience in investment banking
and capital markets.
• Advised on over $6 billion in aggregate
transaction value working in investment banking
at New Century Capital Partners, Merrill Lynch
and Deutsche Bank.
Disclosure: This newsletter is a periodic compilation of certain economic and corporate information, as well as completed and announced merger and
acquisition activity. Information contained in this newsletter should not be construed as a recommendation to sell or buy any security. Any reference to or
omission of any reference to any company in this newsletter should not be construed as a recommendation to buy, sell or take any other action with
respect to any security of any such company. We are not soliciting any action with respect to any security or company based on this newsletter. The
newsletter is published solely for the general information of clients and friends of Headwaters MB, LLC. It does not take into account the particular
investment objectives, financial situation, or needs of individual recipients. Certain transactions, including those involving early stage companies, give rise
to substantial risk and are not suitable for all investors. This newsletter is based upon information that we consider reliable, but we do not represent that
it is accurate or complete, and it should not be relied upon as such. Prediction of future events is inherently subject to both known and unknown risks, and
other factors that may cause actual results to vary materially. We are under no obligation to update the information contained in this newsletter.
Opinions expressed are our present opinions only and are subject to change without notice. Additional information is available upon request. The
companies mentioned in this newsletter may be clients of Headwaters MB, LLC. The decisions to include any company in this newsletter is unrelated in all
respects to any service that Headwaters MB, LLC may provide to such company. This newsletter may not be copied or reproduced in any form, or
redistributed without the prior written consent of Headwaters MB, LLC. The information contained herein should not be construed as legal advice. pg. 9