Q1 2023 – Industry Insights Report

Q1 2023 - M&A Overview

Global mergers and acquisitions activity in all industries during Q1 2023 was down nearly 50%1 on a year-over-year basis due to rising interest rates, high inflation, and fears of a recession, which dampened the appetite of companies seeking deals. These factors, combined with concerns in the regional banking sector following the failure of Silicon Valley Bank, led to extraordinary levels of volatility and uncertainty in the first quarter.

Staffing Industry M&A – Momentum Advisory Partners noted 33 announced transactions of US staffing organizations in the first quarter of 2023, down 15% from the same period last year. Despite the decline, M&A activity in the staffing industry is expected to remain robust throughout the year based on the current run rate.

Acquisitions of IT staffing and consulting businesses were the strongest segment of the sector, with seven announced transactions in Q1. These deals focused on specific skill sets and areas of vertical market expertise.

Strategic buyers continued to dominate M&A activity in the sector, with only one transaction completed by a private equity group as a “platform“2 investment out of the 33 completed transactions in the quarter. However, it should be noted that 21% or seven transactions in the quarter were completed as “add-on” acquisitions. An “add-on” acquisition refers to the purchase of a smaller-sized company by a platform company of a private equity group, where the acquired company is integrated into the existing platform company. The buyers of an add-on are also considered “strategic” buyers. It is noteworthy that despite the lack of platform acquisitions in the quarter, private equity remains highly active in the staffing industry.

“As a firm, we are primarily focused on advising and representing founders and owners of staffing and IT consulting organizations in what we would call the “lower middle-market”, said Managing Partner at Momentum Advisory Partners, Akash Taneja. “These are businesses with annual revenues under $100 million. The majority of our completed transactions have been of companies between $10 million and $50 million in annual revenues. What we’ve observed is that these size of transactions have been somewhat insulated and immune to all the noise we hear in the broader financial markets. I believe it’s fair to assume that the same cannot be said about larger transactions, as there wasn’t a significant deal announced in the quarter.”

Notable Q1 2023 Transactions

Acquired Co.
HOUSTON, TX (Jan. 11, 2023) – Talent Group, a leading national IT staffing company, announced today the acquisition of Queen Consulting Group, a nationally recognized IT staffing and consulting company specializing in healthcare and pharma IT, Epic EMR implementations, financial services, and niche technical recruiting.
Acquired Co.

Washington D.C. (March 14, 2023) – Momentum Advisory Partners announced that INSPYR Solutions , a leading IT staffing and technology solutions firm, announced that it has acquired ProTask, a strategic staffing and consulting agency. Momentum Advisory Partners acted as exclusive advisor to ProTask in the transaction.

Acquired Co.
Columbus, IN (March 22, 2023)—Elwood Staffing announced today its acquisition of NAOS Staffing, a regional provider of on-site contingent staffing and workforce management solutions. This purchase marks the company’s third acquisition this year and its 19th lifetime acquisition. The deal follows Elwood’s January purchase of IES Custom Staffing Solutions and February purchase of Advanced Personnel.

Momentum Advisory Partners Advised Q1 2023 Transaction

 Founded in 2002, INSPYR Solutions, which was formed through the combination of TekPartners, a P2P Company, and Genuent, has grown to employ nearly 2,000 professionals nationwide across twelve office locations. The Company is an experienced and leading provider of information technology staffing and solutions to blue chip customers across a variety of end markets. Since 2021, INSPYR Solutions has been a portfolio company of A&M Capital Partners.

Based in Washington, D.C., ProTask is a regional provider of highly technical, strategic staffing and consulting services across numerous end markets, including financial services, healthcare, financial technology, and telecommunications. Founded in 2010, ProTask currently employs over 100 professionals with an array of skill sets.

Kip Wright, Chairman and CEO of INSPYR Solutions, commented, “Our strategic plan includes the aggressive expansion of our geographic presence in the U.S. through both organic growth and purposeful acquisitions. ProTask stood out as an attractive team to join the INSPYR Solutions family due to their thriving business built on deep relationships and delivering quality technical resources to their client base. We are excited to welcome the ProTask team into the INSPYR Solutions family and look forward to building on this momentum for further growth and success.”

“With the similarities and synergies between our two businesses, it made sense to join forces. Our objective with this transaction is to leverage their capabilities to accelerate our growth in the Mid-Atlantic region,” said Donna Gibb, President and Founder of ProTask. “I’m looking forward to having ProTask join the INSPYR Solutions family and work with their team to not only continue the momentum we have built to date but contribute to the achievement of INSPYR Solutions’ long term growth strategy.”

The acquisition will result in an even stronger national presence for INSPYR Solutions as the Company seeks to further build out its brand and expand its geographic footprint across the country.

Q1 2023 Announced Transactions

Q1 2023 Announced Transactions (cont’d)

Selected Momentum Advisory Partners Transactions

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