More staffing M&A transactions closed in 2025 than in 2024. That number does not tell you what you think it does. The headline figure, 111 deals versus 102 the prior year, looks like a market recovering. The reality underneath it is different.
As we noted in our Q4 2025 Staffing Industry Insights report, the majority of those transactions were small, unrepresented, and largely discounted. Buyers reported a continued lack of quality inventory. Many of the most active acquirers from prior years were largely on the sidelines. The volume went up. The quality did not.
That gap between headline and reality is worth understanding, because it describes where this market actually is heading into 2026.
Why Did Transaction Volume Rise While Market Quality Declined?
2023
2024
2025
from 2022 peak
The staffing industry contracted 14% in 2023, 12% in 2024, and 3% in 2025. That is a cumulative decline of roughly 26% from the 2022 peak. SIA released its updated forecast at the Executive Forum in Austin in late February, projecting 1% growth for 2026. That is not a recovery. It is the beginning of a stabilization. It is worth noting that the same forecasters revised their estimates downward in each of the past two years. The public staffing companies, which serve as a reasonable proxy for private company performance, have reported revenue declines for two to three consecutive years without exception.
Against that backdrop, buyer M&A activity has remained elevated. Some of that reflects genuine growth-seeking. When organic growth is difficult to generate, acquisition becomes a more reliable path to it. But some of it also reflects opportunism. In a market where sellers are under pressure and quality inventory is scarce, buyers willing to move have been able to acquire at discounts that simply were not available during better years. Both dynamics are real, and both have shaped what got done in 2025.
What Do Buyers Actually Want Right Now?
Volume does not mean indiscriminate demand. Buyers in this market are among the most selective I have seen. Diligence timelines have extended. Deal structures have shifted, with more deferred consideration and earnouts for anything that does not meet a narrow set of criteria. The businesses getting done, and getting done well, share a specific profile.
A conversation I had recently with a founder I advised in a sale put it plainly. That business outperformed through the downturn while many competitors struggled. When I asked what they attributed that to, the answer was not technology or strategy in any complicated sense. It was client relationships. The team made a deliberate effort to stay close to clients during the slow period. Phone calls. In-person visits. Showing up when there was not much business to show up for.
When those clients began ramping activity back up, they knew who had been there. That kind of relationship density is harder to replicate than it sounds, and buyers are pricing for it.
That kind of relationship density is harder to replicate than it sounds, and buyers are pricing for it. So is specialization in roles that are genuinely difficult to fill. So is gross margin quality and stability. So is a diversified client base. Concentrated revenue is a meaningful liability in a market where demand has been unpredictable. Businesses with five clients accounting for 80% of revenue face a different conversation than businesses with 30 clients, each representing a manageable share.
In the current environment, the businesses generating the strongest buyer interest share four characteristics: deep, durable client relationships; specialization in hard-to-fill roles; stable and defensible gross margins; and a diversified client base where no single account represents an outsized share of revenue. Concentrated revenue is being treated as a structural liability, not just a negotiating point.
Where Does AI Fit Into the Staffing M&A Picture?
AI sits in the background of all of this. The one segment SIA projects will decline in 2026 is office and clerical, down 5%. Every other segment grows modestly. That pattern is likely a preview of a longer-term shift rather than a one-year anomaly. But AI is not the reason the industry spent the last three years contracting. Weak demand and client caution explain most of that. The AI question is a separate, slower-moving one that plays out over years rather than quarters, and it has a more pronounced effect on certain staffing segments than others.
For buyers doing diligence, the more relevant question is not whether AI will eventually affect a given staffing business, but rather what that business's exposure looks like relative to the roles and verticals it serves. Businesses concentrated in easily automatable work face a different risk profile than those serving technical, clinical, or specialized professional disciplines.
What Does This Mean If You Are Thinking About Selling?
For founders thinking about where their business stands, the honest picture is that not all businesses are experiencing the same market. Businesses with the right characteristics are seeing genuine buyer interest and strong outcomes. Others are finding fewer takers, longer timelines, and structures that reflect the uncertainty buyers are trying to manage. Which side of that line a business sits on matters more right now than it has in some time.
Some founders will read this and conclude the timing is not right for them. That is a legitimate conclusion. The decision to sell is personal, and trying to time a market is rarely the right frame for it. The more useful frame is understanding what a buyer would actually think of your business today, where the gaps are, and whether the conditions that produce strong outcomes are present or can be developed. That is the kind of assessment we provide through the MAVO process, and it is worth having regardless of what you ultimately decide.