Human Resources & Staffing Services – March 2021

Human Resources & Staffing Firms Adapt to Labor Market Shift

Capstone’s March Human Resources & Staffing Services Coverage Report is now available, highlighting the COVID-19 headwinds and historically high unemployment rate, which have fostered bifurcated demand in the HR & Staffing Services industry. Companies serving noncyclical end markets such as Healthcare and IT have experienced continued demand amid the pandemic, while HR & Staffing companies serving industries that have suffered like Retail, have experienced decreased demand. Although 2020 deal volume is down substantially year-over-year (YOY), the HR & Staffing Services industry experienced a mild resurgence in Q4 transaction volume lending to a favorable outlook for 2021.

Included in this report:

• The U.S. labor market has demonstrated sequential improvement lending to increased demand for staffing services providers in defensible end markets.
• Rapid adoption of remote work has exacerbated the necessity of digital solutions in talent placement and recruiting.
• Strategic buyers in the industry have acquired companies in noncyclical end markets to spur inorganic growth, accounting for 67.7% of deals announced or completed in 2020.
• Private equity (PE) add-on activity remained relatively robust accounting for 23.7% of total deal volume in 2020, as PE-backed HR & staffing services providers sought to bolster service offerings.