2019 Midwest Staffing Conference

On May 22nd & 23rd I attended the Midwest Staffing Conference in Schaumburg, Illinois at the Hyatt near the Woodfield Mall.

In attendance were executives, staff and vendors to the staffing industry primarily from Illinois & Wisconsin, with a smattering of members from Iowa, Missouri, and Indiana.

Having specialized in the staffing industry for ten years, it was great to meet these people in person. There were great workshop programs and key note speakers which emphasized the importance of what this great industry lends to…the local economies and the nation as a whole.

I learned that the staffing industry provided 1.1 million jobs in Illinois last year and 337,000 in Wisconsin. Nationally, there were 16.8 million jobs generated by the staffing industry representing $167 billion in revenues. This is a 4% increase over 2017 and there are currently 1.8 million jobs unfilled in this country.  All in all, the staffing industry represents a little more than 2% of the nation’s employment. There is great opportunity out there to grow even in this tight labor market.

I met some terrific up and coming professionals while there.

Due Diligence

Business owners’ traditional routes to selling their companies was to a strategic buyer, a financial buyer or handed it down to family members. Today, more and more business owners are entertaining selling only a portion of their business and staying on to assist operating it.

This is a good choice for business owners to buy out other partners or want a new partner, but aren’t ready to exit their business altogether.

Taking capital and not leaving the business is a unique transaction.  No matter what portion of the company the business owner sells, it is imperative they do a thorough job of due diligence for their potential new partner(s).  It is understandable that a business owner becomes excited at the prospect of receiving a large sum of capital from a sponsor that they get lax or forego some of their due diligence on their partners and or the terms of the deal.

Then they may find themselves in a very uncomfortable position if things go south and they get stuck trying to undo the deal without a lot of aggravation and risk to the business, not to mention what it will cost, legal bills etc.

The due diligence needs to be thorough, the agreement needs to be sound and the partners have to have the right fit to allow the company to grow to scale as intended.

Lack of control or partial control investments can last up to 10 years in some cases, with the right synergies.

Human Cloud Revenue Nearly Doubles

Online Staffing using the Human Cloud was in its infancy 10 years ago and has quickly blossomed into a $50 billion piece of business.  The staffing industry is evolving with today’s technology and its applications. Check out the article, Human Cloud Revenue Nearly Doubles, for a broader story.

Bob Wolter, Business Intermediary

Piece by Piece

The staffing industry has gone through many changes in the last 10 years and guidelines of doing business back then have evolved in an ever increasingly competitive climate, especially, because unemployment is so low and recruits are hard to find, making it difficult to grow.  So, what is the most successful way to grow in this climate?  Through acquisitions.  This article, Piece by Piece, is a good example of what to do to achieve that goal.

Bob Wolter, Business Intermediary

Temp staffing revenue growth speeds up in March, new orders at highest level since 2015

Bob Wolter, Business Intermediary –
Thought you would find the article in Staffing Industry Analysts interesting. Temp staffing revenue growth speeds up in March, new orders at highest level since 2015.

 

Staffing Industry Trends

Bob Wolter, Business Intermediary

Having specialized in the staffing industry these last eight years, I have observed that the performance of the industry is one of the first indicators as to how the economy is trending. 2009 was a terrible year for most all businesses and we know the reasons why. Most staffing firms had revenues that dropped 30% -35% from 2008 levels. However, as 2010 wore on the staffing industry showed significant strength and promise and it continued into 2011 & 2012. This was a welcome relief and M&A activity became brisk as a result…those buyers that had a growth platform through acquisitions were very busy indeed and many transactions resulted.

Fast forward to today…the trend in the staffing industry is flat. Hampered by regulations, Obamacare, lack of skilled workers and a ho hum economy, there are not many bright spots. This may indicate, as it has in the past, that we are in for a dicey period in our economy. The staffing business hasn’t trended down yet but keep an eye on it.

Thought I Was Done Vetting Out All The Details

Bob Wolter, Business Intermediary

Recently, I was working diligently with a business owner and successfully marketing his business on a national level. I thought I had done my best vetting out all the details, hairs and warts, etc. We were negotiating terms with a very qualified Private Equity Firm that was offering full price and equitable employment agreements with the principals to stay on. We thought we had a deal!

Then all of a sudden, one principal declared that the terms in his divorce agreement with his ex-wife were going to severely impact how much he would end up with in his back pocket after he settled. As a result, that principal decided with the other partners to take the business off the market until they built up the business’s value further to realize more money later.

This new development came late in the game, and I, along with the buyer, was surprised by this revelation. We spent 6 months marketing this company and entertained many interested parties only to end up where we did.

The lesson here is that when initially interviewing your client, you have to identify any and all items that could negatively impact the outcome of a potential sale. The subject of divorce terms can become delicate and emotional for all involved, but it must be addressed, the earlier the better.

Turns out between the seller, the CPA and the buyers, we may have found an equitable solution. I keep taking my Tums…