Headwaters MB Industry Overview
Transcription
Headwaters MB Industry Overview
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 [email protected] Vice President 720.310.0403 [email protected] • 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