On the latest episode of The Deal’s Behind the Buyouts podcast, Solomon Partners managing director Connor Mitchell dives into the world of staffing and consulting M&A, which saw record transaction volumes and valuations last year.
Once viewed as cyclical and commoditized, the pandemic accelerated a “reversal in thinking” among private equity investors when it came to the sector, said Mitchell, part of the firm’s business services team in Chicago.
Staffing and consulting services grew more in demand as more companies began to realize pre-pandemic the importance of retaining and optimizing talent and the need for efficiencies across different functions such as technology and the supply chain to increase profitability. This trend was boosted by remote working during lockdowns, the subsequent supply chain troubles and the “great resignation.”
Meanwhile, proven strategies and an attractive exit landscape also have more investors surveying the sector. Among recent notable deals, New Mountain Capital LLC made a majority investment in specialized contingent staffing and consulting business Alku LLC in April.
Dealmaking in the sector has naturally cooled off from the highs of last summer amid broader economic uncertainty this year. Still, the M&A slowdown is temporary, and key trends around digital transformation and staffing segments with secular growth will have the sector busy with deals again, according to Mitchell.
Listen to the full podcast with Connor Mitchell below: