A Tight Labor Market is Driving Acquirer Appetite for Staffing Services Firms in a Changing Economy
Boston, MA – Capstone Partners, a leading middle market investment banking firm, sees persistent acquisition appetite for staffing services firms following the recent sale of Infinity Consulting Solutions (ICS)—a leading IT staffing and recruiting company—to global organizational consulting firm Korn Ferry.
Capstone advised ICS on the transaction and says the deal highlights important trends in both the broader economy and the HR & Staffing mergers and acquisitions environment.
As referenced in Capstone’s latest Human Resources & Staffing Services Report, job seekers have gained substantial leverage in employment opportunities, driving demand for recruitment and onboarding services. Acquirers are targeting staffing companies with strong networks of professional services applicants—particularly in areas like skilled IT—in an effort to meet vacancies in a world where employees have regained control of the labor market and are demanding flexibility. In addition, temporary and temporary-to-permanent recruiting demand has spiked in the face of a post-pandemic lifestyle.
Despite climbing inflation and recessionary pressures, unemployment remains at historic lows, coming in at 3.5%—the lowest since the onset of the Covid-19 pandemic—in July. Buyer appetite for higher-margin businesses has remained consistent, specifically in areas of Professional Staffing such as Information Technology, Healthcare, and Life Sciences. HR and staffing services providers with a history of financial stability, growth prospects, and experienced management teams continue to be categorized as high-quality assets, commanding buyers’ attention and receiving favorable valuations.
Founded in 2001 in New York, Infinity Consulting specializes in filling senior-level IT interim professional roles, with additional expertise in compliance and legal, accounting and finance, and human resources positions.
ICS boasts wide geographic reach, a deep and seasoned management team, a diverse and stable group of marquee clients, and consistently high margins. Like with other staffing providers focused on IT, the ongoing transition to the cloud as employees at large demand more flexibility played to the company’s advantage as more businesses look to hire programmers and developers to support work-from-home infrastructure.
Jesse Betzner, Senior Director at Capstone Partners, remarked, “There continues to be robust buyer interest for well-managed, privately-held staffing firms focused on interim placements, especially for skilled IT positions. We expect this trend to continue for the foreseeable future, as the pandemic’s impact on workplace dynamics appears to be long-lasting.”
Gary D. Burnison, CEO at Korn Ferry, commented, “Today, Boomers are retiring and career nomads are looking for change—early and often. Our clients have entered a new reality where shortages of skilled labor are projected to persist, particularly in high-demand areas such as IT. Korn Ferry’s acquisition of ICS echoes our commitment to scale our solutions and further increase our focus at the intersection of talent and strategy—wherever and however the needs of organizations evolve.”
Learn more about the transaction here.
ABOUT KORN FERRY
Headquartered in Los Angeles, Korn Ferry is a global organizational consulting firm that helps clients design optimal organization structures, roles, and responsibilities. The firm employs 10,000 people in 50+ countries and provides services in talent acquisition, organizational strategy, rewards and benefits, assessment and succession, and leadership development. Learn more here: www.kornferry.com.
ABOUT CAPSTONE PARTNERS
For over 20 years, the firm has been a trusted advisor to leading middle market companies, offering a fully integrated range of investment banking and financial advisory services uniquely tailored to help owners, investors, and creditors through each stage of the company’s lifecycle. Capstone’s services include M&A advisory, debt and equity placement, corporate restructuring, special situations, valuation and fairness opinions, and financial advisory services. Headquartered in Boston, the firm has 175+ professionals across the U.S. With 12 dedicated industry groups, Capstone delivers sector-specific expertise through large, cross-functional teams. Capstone is a subsidiary of Huntington Bancshares Incorporated (NASDAQ: HBAN). For more information, visit www.capstonepartners.com.
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