Q2 2026 Overview
Q2 2026 closed with 26 North American staffing and recruiting transactions — down from 35 in the first quarter and from 38 in the second quarter of 2025.
After a first quarter that was the strongest opening quarter in three years, Q2 gave that momentum back. We wrote in April that encouraging headline numbers were sitting atop underlying dynamics that remained difficult, and this quarter confirmed it. The challenges that have defined this cycle since 2023 persist — soft demand first among them — with AI adding a layer of uncertainty that every staffing business, and every buyer of one, is still working through. The acquisition engine that briefly appeared to be turning over in Q1 has not found sustained momentum.
The decline was concentrated rather than broad. Light Industrial/Commercial, which produced seven transactions in Q1, produced one in Q2 — accounting for two-thirds of the quarter-over-quarter decline. We flagged the segment’s first-quarter revival as a welcome signal in our Q1 2026 report; it did not carry into the second quarter. Healthcare was the only segment to grow, and IT Staffing and Consulting led all segments at seven transactions. We would caution against reading the shifting segment mix as rotation or trend. At 26 transactions, one quarter of mix tells you more about randomness than about where capital is moving. The story of the quarter is simpler: activity fell.
The Buyer Retreat
The more consequential shift is on the buy side, where there are simply fewer acquisitive buyers today. The industry’s largest names spent the quarter as net sellers: ManpowerGroup divested Jefferson Wells, Adecco divested Entegee, Epic Staffing sold its government division, Hays exited six European countries, and Cross Country Healthcare agreed to sell outright. Among serial acquirers who did transact, several bought consulting, solutions, or technology capability rather than talent businesses, and only one private equity deal was a conventional staffing add-on.
Organic growth is scarce in a soft-demand environment, and the consolidators who built their platforms through acquisition cannot sit out indefinitely. But we do not expect them back in a meaningful way until the industry holds its footing for more than a quarter or two.
“The buyer retreat is only half the constraint. The other half, and it is not new, is the continued scarcity of quality assets coming to market. Fewer acquisitive buyers and fewer quality assets are not separate problems — each reinforces the other.”
“Valuations have compressed further, and structure is doing more of the work, with earnouts and contingent consideration increasingly used to bridge value gaps and shift risk onto the seller. This market rewards quality, and quality remains scarce.”
Akash Taneja, Founder & Managing Partner, Momentum Advisory PartnersSector Highlights
IT Staffing and Consulting led all segments with seven transactions, 27% of the quarter. Healthcare, Search, and Other Professional each followed with six, 23% apiece. Light Industrial/Commercial fell to a single transaction — from seven in Q1 — the largest single driver of the quarter’s decline.
ZRG was the quarter’s most active buyer, completing three acquisitions — Howard Fischer Associates, Sterling Martin Associates, and Fortium. The quarter’s largest disclosed transaction was Knox Lane’s agreement to take Cross Country Healthcare private for $437 million, a 31% premium, expected to close in Q3. Alongside it, the largest strategics were net sellers, with ManpowerGroup, Adecco, Epic Staffing, and Hays all divesting during the quarter.
Within the professional segments, activity has migrated steadily toward consulting, solutions, and hybrid delivery. Several of the quarter’s professional deals rested as much on project delivery and advisory capability as on placement volume — a continuation of the pattern we have flagged in prior reports, and one that narrows the buyer pool for traditional, placement-only firms.
What This Means Going Forward
In April we identified the specific signals that would change our view. None of the four arrived in the second quarter:
- A broadening of buyer criteria. Buyers remained narrow, concentrating on capability and specialization rather than revenue.
- More quality deal flow reaching advisors. Well-run, attractive businesses remained the exception, and most owners of those businesses chose to stay on the sidelines.
- Increased private equity add-on activity. Only one private equity deal in the quarter was a conventional staffing add-on.
- Some easing of the macro headwinds. The demand and confidence pressures weighing on buyers did not relent.
Our position entering the second half is unchanged from where we began the year: this market rewards quality, and quality remains scarce. Founders who waited years for a turnaround that never arrived are accepting that the outcome they were seeking in 2021 and 2022 no longer exists for them — and for those with genuinely differentiated businesses, buyer interest is still there for the finding.