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By Published On: December 11, 2024

Over the last year, FOCUS’s Human Capital Management team has spoken with many owners of healthcare and IT staffing and recruiting businesses that have been impacted by industry headwinds. In some cases, owners have postponed a planned business sale, opting to wait for growth to return to their Company’s P&L as industry dynamics improve. Given the importance of trailing twelve months (TTM) financial performance in determining M&A valuations, waiting can be a reasonable strategy, but by doing more than waiting owners can reap benefits now and at the time of a future sale.

  • Identify Opportunities to Differentiate: While you are waiting for the tide to turn, take a close look at your market segment. Does your client base (and prospective client base) have unmet needs that your firm could address? What are best in class staffing solutions providers doing that is unique or different?  Delivering differentiated solutions to clients’ staffing challenges positions your firm to capture an outsized share of the gains when they begin spending more freely and may also insulate you somewhat from the pain of future spending pullbacks.

  • Reinvigorate Business Development: When business is booming, it’s easy to lose focus on sales and business development and become an “order taker” rather than a solutions provider and active seller. Now is the time to proactively reengage with clients (and prospective clients and even past clients) to better understand their evolving needs and how your service offerings might address them. These efforts often yield the ‘Aha moments’ that can help you pinpoint client pain points and develop service offerings to address them (see #1).

  • Upgrade Processes and Systems: Take a close look at your day to day processes and the systems that support them. If you are still using outdated systems and the cumbersome processes that go along with them, now’s the time upgrade, not when you are operating at breakneck speed or in the middle of a due diligence process. Buyers will notice, and they are looking for efficient and sustainable operations, not “fixer uppers” that will require significant investment to update to today’s standard business practices.

  • Prepare for Sell-Side Due Diligence: Any business owner who has been through a due diligence process will be quick to share that it is exhaustive (and exhausting). However, there are things you can do now to make it more manageable. Make sure you have final, signed versions of all client and vendor contracts, ensure you are properly licensed in all jurisdictions where you do business, confirm you are up to date and complying with all employment laws and regulations where you operate, and work to resolve any outstanding legal or compliance issues.

For a confidential conversation about FOCUS Investment Bankers M&A process and what else you can do to prepare your company for a future sale, contact me at [email protected]

April Taylor, a FOCUS Managing Director, has more than 20 years of consulting, management, and M&A advisory experience. Since joining FOCUS in 2010, Ms. Taylor has worked on numerous transactions involving businesses in the business services, human capital management, and technology and software fields. Prior to joining FOCUS, Ms. Taylor worked in product marketing and business analytics roles at AOL. In her role as Director of Business Operations and Analysis at AOL, she led a team responsible for providing analysis, reporting, and strategic recommendations for products generating more than $150 million in annual revenue. She also managed 20+ cross-company initiatives which doubled the retention rate of canceling AOL subscription members as users of AOL’s free, advertising supported products. Before that, Ms. Taylor was a management consultant and case team leader at Bain & Company, where she worked closely with client management teams, including C-level executives, to deliver measurable financial and operational improvements to businesses in a wide range of industries. Her engagements at Bain included identifying growth and cost savings opportunities, developing implementation plans, and performing investment due diligence. Ms. Taylor received an MBA from the Kellogg School of Management at Northwestern University, and a B.A. in economics from Wellesley College. She is also a CFA charter holder and holds FINRA Series 7, 63, and 79 licenses.
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