Q2 2022 - M&A Overview
Q1 2022 was a continuation of a very active M&A market in the Staffing and Workforce Solutions Industry in 2021. However, Q2 2022 showed signs of slowing as Momentum Advisory Partners noted 31 announced transactions in the quarter. Compare that to 39 announced transactions in the first three months of this year. That’s a quarter-over-quarter decline of just over 20%. So, is this a sign of what’s to come or will we see a rebound in the last few months to close out the year strong?
There was a lot of uncertainty in the broader economy through most of the second quarter. Rising inflation, liquidity tightening across central banks, public markets turning bearish, continued supply chain disruptions, and the conflict in Ukraine. It’s no surprise we slowed down from the red-hot M&A market we’ve been in for the last 18 months as these major macroeconomic headwinds and geopolitical tensions drove down transaction value and volume.
With all that said, there are segments of the market that we remain very bullish on and do not expect to see much of a slowdown. In particular, IT staffing and solutions/consulting firms remain very attractive among buyers and are continuing to see significant interest. We see this first-hand with active mandates we are involved in within the segment. The appetite for quality IT staffing and solutions/consulting targets remains very high.
There were 11-announced transactions of IT staffing and solutions/consulting firms compared to nine in Q1. Our expectation is that deal flow in the segment will continue to see strength through the balance of 2022 as digitalization continues at an accelerated pace.
We recently spoke with Dustin Abbs, Director of Corporate Development at The Planet Group, about his thoughts on the M&A market in our industry. The Planet Group has been one of the most acquisitive organizations in the space of the past couple of years. Just recently, they announced the acquisition of Launch Consulting Group. This follows the acquisition of Strive Consulting back in January. “We continue to see strong tailwinds for digital transformation staffing and consulting services. In the first half of 2022, we completed two acquisitions and saw strong deal flow. We will continue to be acquisitive over the next 6-12 months but our threshold for M&A targets will be high as we navigate through some uncertainties in the current macro environment.”