Staffing M&A Market Update: 2024 Review & 2025 Outlook

Key Takeaways

• Staffing M&A activity remains strong, despite “declines” from record levels in 2022; Q1 2025 activity was up meaningfully as compared to Q1 2024 levels
• Healthcare Staffing deal activity has recovered/normalized; IT Staffing is poised for an uptick in activity in 2025 as both buyers and sellers appear intent on transacting in this sub-sector in the near-term
• Despite the market disruptions and uncertainty today, Staffing M&A is expected to continue to follow the sustained upswing in activity we have seen since 2018

Having recently returned from Staffing Industry Analysts’ (SIA) 2025 Executive Forum, and requests from industry executives for an updated pulse on Staffing M&A, UHY’s National Staffing Practice is excited to share real-time insights on today’s Staffing M&A market.

Following record Staffing M&A activity in 2022 (139 total deals), activity has now declined for two consecutive years, with 2023 seeing a 17 percent decline (116 deals) and 2024 a further 20 percent reduction (93 deals) in the number of Staffing transactions announced. “While we have clearly seen a reduction in M&A activity since 2022, it is important to point out that we remain in a period of ‘elevated M&A activity’ within the broader Staffing sector,” says Jeremy Falendysz, Partner and Managing Director with UHY Corporate Finance, and a member of UHY’s National Staffing Practice. The industry saw an average of 105+ deals announced annually in the 7-year period from 2018 to 2024, which is 50 percent higher than the prior 10-year average of ~70 deals from 2008-2017. 

In fact, while 2024 represents a 4-year low in sector M&A activity, the 93 deals announced in 2024 is higher than any year in the 10-year period from 2008-2017. “This indicates that Staffing M&A remains active and constructive for both buyers and sellers, or at least more so than the downward trajectory since the record print in 2022 would suggest,” explains Jeremy Falendysz. 

In fact, Q1 2025 saw an uptick of +25 percent in deal volume vs. Q1 of 2024, suggesting some recent momentum in early 2025. It is, of course, too early to tell how the broader macroeconomic backdrop will impact Staffing M&A throughout 2025, but UHY believes that Staffing M&A will continue to be a solution for growth-oriented operators starved for growth, as well as owners seeking a liquidity event on fair terms. “We are in meetings with 2-3 Staffing company owners each week, including buyers looking to team up to identify acquisition targets, and sellers looking for an exit in 2025 or 2026,” says Bryan Besco, a leading member of UHY’s National Staffing Practice. “Finding common ground on deal terms may become more challenging, but these discussions will continue to drive the ‘elevated M&A activity’ and Q1 uptick we have observed to date.”

Staffing M&A by Segment

Looking beneath the surface reveals that only Healthcare and Place & Search sub-sectors saw more deals announced in 2024 vs. 2023; these were also the only two sub-sectors to represent 20+ percent of total Staffing M&A during the year. Healthcare seems to be picking up steam following two years of significant declines in activity as buyers and sellers struggled to find common ground around deal value, structure, and future bill rates, particularly in 2023 which only saw ~15 deals announced. “We saw some nice momentum, with Healthcare Staffing M&A activity increasing each quarter throughout 2024,” observed Wiley Lane, Vice President with UHY Corporate Finance. “And while we don’t think the 30+ percent increase will continue in 2025, we do see this as evidence that some of the deal-related challenges in Healthcare Staffing over the past several years have normalized.”

Professional and IT Staffing represented ~15 percent and ~14 percent of total deals, respectively, with Light Industrial (“LI”) representing ~11 percent. Jeremy Falendysz notes that “over the past six months, the majority of meetings with prospective sellers have been in the IT or multi-sector areas, while the majority of meetings with prospective buyers have been on the IT and LI side.” As such, UHY believes that (i) deal activity in IT Staffing will continue throughout 2025, with both buyers and sellers looking to transact in the next 12-18 months, (ii) LI transactions may struggle as sellers hold back on exits pending more clarity around the macroeconomic picture, despite interest from buyers, and (iii) smaller, multi-sector sellers will need to be strategic to find a good home (along with attractive deal terms) as most buyers tend to be more sector-focused and specialized.

Valuations & Deal Structure

We will need to see how the broader macroeconomic developments impact Staffing company valuations throughout the year, but in 2024 and through Q1 2025, Staffing M&A valuations remained fairly consistent with historical levels. A general rule of thumb for middle-market Staffing companies (i.e., EBITDA in the $3-$4 million area) is that (i) values in the 4.0x-4.5x range are associated with lower growth/margin businesses in the LI and Commercial sub-sectors, (ii) values in the 5.0x-6.0x range are associated with businesses active in the Professional Staffing spaces, and (iii) values in the 5.5x-7.0x range are associated with high growth/margin Staffing businesses, such as those active in the Healthcare, Life Sciences, and IT spaces (with some upside to that range). “Due to the wide range of factors contributing to the ultimate valuation paid, it is advantageous for sellers to complete a valuation assessment prior to a liquidity event,” explains Bryan Besco. Requests from owners for pre-sale valuations has picked up in the past 6 months because of the significant operational differences between Staffing companies, and as owners struggle with the ‘sell vs. hold-and-try-to-grow’ decision. And, of course, how you go to market as a seller, or how you identify acquisition targets as a buyer, also plays a significant role in valuation outcomes. Simply looking at deals from sell-side advisors is not the optimal way for most Staffing firms to grow through acquisition. 

“You need to be identifying sellers before they engage professionals if you want to maximize the economics of acquisitions,” notes Jeremy Falendysz. “It takes a lot of time and work, but our buy-side search clients have acquired companies several turns below fair market value and with 20-30 percent cash at close in some situations.” 

Likewise, running an Investment Banker-led sale process, vs. sending out internal financials and negotiating on a one-off basis with a singular buyer, can generate meaningfully higher values. “When we represent Staffing company buyers, my first questions to sellers are ‘who is representing you?’, ‘is there a CIM?’, and ‘when is my bid due?’,” says Jeremy Falendysz. “The wrong answers to those questions can drive the value and cash at close numbers down meaningfully for sellers.”

While valuations are clearly of high importance in M&A transactions, factors that determine just how much cash sellers receive (and when) tend to be just as important in assessing the attractiveness of a deal. As such, deal structure remains a critical consideration in any M&A transaction. Due to the unique operational dynamics in the Staffing industry, particularly as it relates to month-to-month fluctuations in placement volume and margins, Staffing acquisitions tend to include meaningful deal structure (vs. 100 percent cash-at-close transactions). Deferred consideration, such as performance-based earn-outs, seller notes, and escrows, historically represented ~50 percent of total consideration for Staffing transactions looking back 5+ years. During 2021-2022, cash at close in Staffing deals peaked in the 90-100 percent area as buyers competed aggressively to win highly competitive auction processes. “Today, cash at close in a marketed process tends to be in the 70-80 percent area, with those one-off negotiated deals outside of a process seeing cash at close as low as 20-30 percent in some cases,” explains Wiley Lane. 

2025 Staffing M&A Outlook

Given some of the recent macroeconomic uncertainty, the range of potential outcomes in Staffing M&A (or U.S. M&A in general) for the remainder of 2025 is expansive. That said, absent potential tail events, we believe Staffing M&A will remain in a range characterized as “elevated activity,” consistent with what we have seen in the 2018-2024 period. Preliminary data suggests that Q1 2025 deal announcements (i) saw an uptick of +25 percent vs. Q1 of 2024 and (ii) represented the most Staffing M&A deal activity since Q4 2022. As such, UHY forecasts the demand for acquisition-based growth in the Staffing industry will remain high, particularly for strategic buyers. UHY further expects valuations to remain healthy across Staffing sub-sectors in 2025, absent any material market disruptions brought about by labor demand (i.e., immigration policy, tariffs, and their impact on global/macro demand, etc.). We estimate that 2025 Staffing deal volume will fall in the 85-100 range. “Despite the rather significant market disruptions and uncertainty playing out today, Staffing M&A is expected to continue to follow the sustained upswing in activity we have seen since 2018,” suggests Jeremy Falendysz. “That, of course, assumes that the macroeconomic picture holds, and we do not experience the start of a deep recession in the second half of the year.” 

UHY’s National Staffing Practice serves clients across all Staffing industry sub-sectors and is involved in 15+ Staffing industry associations throughout the country. Fill out the form on this page to connect with a member of our National Staffing Practice today.