ConcurrentSession How$to$Implement$an$Acquisitive$ Growth ... ·...

©2017 by Crain Communications Inc. All rights reserved.

Concurrent SessionHow to Implement an Acquisitive Growth StrategyModerator: Timothy Landhuis, Research Manager,

Staffing Industry AnalystsPanelists:§Al De Bellas, President, De Bellas & Co.§ Jeffrey Duclow, SVP, Staffing Services Group,Wells Fargo Capital Finance

§Dave Phillips, Managing Director, Childs Advisory Partners§Vincent Rossy, CEO, CorTech


How does acquisitive growth fit within a company’s overall strategy?


How should an acquirer go about defining and identifying a potential target?


What financing options are available?

• Cash• Lines of credit (A/R based)• Term loans• Mezzanine debt• Private equity group

(minority or majority investor)


TRADITIONAL FINANCING MINORITY RECAP/GROWTH EQUITY MAJORITY RECAPITALIZATION

OVERVIEW

§ Leverage combined Companies Balance Sheet

§ Cash on Hand§ Account Receivable -‐‑ Line of Credit § Term Loans§ Seller note (interest bearing)§ Earn-‐‑outs

§ 10% -‐‑ 49% sale of equity § Use of proceeds important in determining growth equity or dividend / distribution

§ Governance, investor rights, put mechanism are very important

§ Maximum valuation possible if fit is excellent§ Sell 51% -‐‑ 80% of the equity to a private equity group

§ Typically involves leverage § Somewhat dependent on managementobjectives / willingness to stay active

§ Often involves new equity security

SOURCES§ Banks § Mezzanine Lenders§ SBA§ Friends and Family

§ Private equity firms that are comfortable with shareholder liquidity and holding minority positions

§ Private equity firms focused on holding majority positions / full buy-‐‑outs

§ Many of these firms will consider minority positions as well

PROS

§ Maintain 100% ownership§ Existing Management maintains decision making

§ Leverage existing and /or expand funding relationships

§ Partial liquidity today with additional exit event later

§ Existing management maintains decision-‐‑making and majority control

§ Access to growth / add-‐‑on acquisition capital

§ Preserves brand and culture§ Addition of value-‐‑add equity partner and insightful Board representation

§ Material liquidity today with additional exit event later

§ Substantial cash upfront enables owner to “take chips off the table” while still sharing in future upside

§ Financial backing for growth plans and / or acquisitions

§ Incentive option pool established§ Addition of value-‐‑add equity partner and insightful Board representation

CONS

§ Managing additional debt/leverageon the business

§ Personal Guarantees § Cost of debt

§ Not a total exit§ Additional oversight and performance scrutiny

§ Terms can force transaction in the future

§ Loss of control§ Managing debt load and PEG oversights§ PEGs may have concerns in cashing out too much of management’s share

§ Complicates the capitalization

Source: CHILDS Advisory Partners


How much time do acquisitions take? What advisors/staff do you need?


How do you ensure a successful integration?


Based on your experience, what is your best advice on growth via acquisition?


Appendix: 1Q16 Selected AcquisitionsBuyer Acquired Company

Active Staffing Services Blass Employment Corp.Advanced Discovery Legal Placements Inc.AtWork Group Desert Personnel ServicesBear Staffing Action Personnel Services Belcan LLC Tandel Systems Cenergy International HKA EnterpriseGeneral Employment Enterprises Paladin Consulting Inc.Hire Velocity BHS Hire LLCIntersect Group 3CiJW Michaels & Co Execusource Inc.MSI International Masters IT LLCMTS Health Investors LLC HCCA Health Connections Inc. HCCA InternationalOptimum Talent and Conroy Ross Partners Toombs Inc (Vancouver office only)Provision Corporate LadderSharp Decisions Inc. CN-‐TEC (Denver and Phoenix offices only)The Fahrenheit Group Bencks & CoThe Hamilton-‐Ryker Group Omni PersonnelThe TemPositions Group of Companies Opus Staffing and Opus ScientificTrillium Staffing Atlantic Associates Inc.Vector Technical Resources EEI Communications (staffing division)Vistra Group Supplemental Health Care



Advanced Medical Personnel Services Inc. Rise Medical StaffingAlliance Resource Group The Bennett GroupAMN Healthcare Peak Health SolutionsCommand Center Hancock StaffingCompunnel Software Group, Inc. Sherwood Consulting, dba Base36 Inc.Construction Labor Contractors LLC Skilled Labour Solutions CorTech LLC Penski StaffingElwood Staffing White Staffing Management

Source: SIA Staffing Merger and Acquisition Annual Report 2016

©2017 by Crain Communications Inc. All rights reserved.Source: SIA Staffing Merger and Acquisition Annual Report 2016


Advanced Medical IPI Travel NursingAlliancePharma Inc. Pro-‐J-‐PharmaBlueline associates BlueStaff (IT division only)CHG Healthcare Services Global Medical StaffingCorTech LLC MSI InternationalDiversified Search BioQuestElwood Staffing Berks and Beyond Employment ServicesEnergy Staffing Solutions Labor Smart (Marietta and Knoxville branches only)Malone Workforce Solutions NextaffMdstaffers LAM and AssociatesMitchell Martin Inc Spring Lake ConsultingNoor Staffing-‐SearchPointNY The Legal GroupOnin Group Universal Labour and StaffingPediatric Therapy Services AlphaVista ServicesThe Service Companies Drake StaffingTherapy Staff TheraStaff LLCTransforce KAS Personnel ServicesVaco Momentum ResourcesWorkway Regal Personnel ZRG Partners McLean Consulting

©2017 by Crain Communications Inc. All rights reserved.Source: SIA Staffing Merger and Acquisition Annual Report 2016


Accountable Healthcare Staffing Inc. Horizons Medical Staffing and Hopewell HealthcareBelFlex Staffing Network First Line Emergency Response Team (FLERT)BelHealth Investment Partners LLC AHS StaffingBlackstone and co-‐investors Team Health HoldingsCompunnel JobhukCorTech Resources4StaffingDecton Cutting Edge StaffingHighlands Ventures Sonoma ConsultingKyyba Inc. ASG Renaisance (staffing contracts only)New Heritage Capital Execu|SearchPeoplelink Group TeamSoftRevel Consulting Two Shea ConsultingRSR Partners Higdon PartnersSeek Careers/Staffing Inc. Landmark Staffing ResourcesStone Resource Group ServPartersStraussGroup Fiorella Search GroupVaco Healthcare Pivot Point ConsultingVaco Healthcare GreythornYoh Starpoint Solutions


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Coming up …

§Networking Lunch12:30-‐2:00 PM | Seaview & Marina Lawn

Sponsored by


§ Probing the Human Cloud Interviews | 2:00 PM

– Rob Biederman, CEO, Catalant TechnologiesCoronado AB

– Jody Miller, Co-‐Founder & CEO, Business Talent GroupCoronado C

– Mynul Khan, CEO, Field NationCoronado DE

– Eddie Lou, CEO & Co-‐Founder, ShiftgigRegatta ABC

After lunch …


§ Ideas in Action (4th level) | 2:00 PM

– Looking for More Efficiency in Your Hiring?Meet Predictive Analytics for Job AdsPresented by Job2Careers | America’s Cup B

– Automate or Die: Reinvent Your Staffing BusinessPresented by EmployStream | America’s Cup D

After lunch cont’d …

ConcurrentSession How$to$Implement$an$Acquisitive$ Growth ... ·...

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