How to Sell Your Staffing Agency
You’ve been thinking about it and have decided that it could be the right time to sell your business, specifically your staffing agency. Staffing agency acquisitions have gained excellent traction since the pandemic. The economic reset around the recession and the pandemic, along with mass layoffs and remote work flexibility, has created a job seeker’s market. However, it’s become more challenging for businesses to attract and retain qualified employees, compelling them to turn to staffing agencies.
Recent reports show that the staffing and recruiting industry is projected to grow by 14%. This is great news for recruitment agencies, but even better for recruitment agencies looking to sell in the near future. That said, it’s pivotal to do your due diligence and put the proper price tag on your staffing agency to maximize your potential returns.
Here are a few tips to successfully sell your business:
Work with an Experienced Business Broker
Using a business broker to sell your business allows you to focus on running your business and increases your chances of gaining maximum value. When you work with the right broker to sell your business, you’re getting access to expert assistance, market-related valuations, a marketing plan, and advertising. A broker will also help you with agreements and legal documentation.
An experienced business broker is well connected and understands how to sell a business properly. Business brokers bring with them a valuable network that you’ll gain exclusive access to. They can check out the most qualified bids as they boost your selling position and engineer the process to make sure you obtain the highest possible returns.
Get Organized and Know Your Numbers
Accurate and up-to-date business financials are probably the biggest component of selling your staffing agency. Incomplete or messy books could kill the deal before it gets started or have the buyer offer far less than what your agency is worth.
It’s important to start cleaning up your bookkeeping as early as possible so you can have time to review paperwork and make adjustments. Put together all necessary documentation relating to finances, including profit and loss sheets, balance sheets, revenue projections, personal tax returns, and more, to ensure your accounting is accurate.
Understand key numbers: relative growth in gross and net income, the financial position of the business, outstanding liabilities, number of customers, and growth projections.
You’ll want to incorporate a client list, copies of service agreements, and information on a lease agreement, equipment, and supplies. Ensure your staffing agency is free from undue legal exposure that could pose a risk to potential buyers.
Keep your Internal Team Motivated
Potential buyers are after continued success, and the biggest contributor is the strength of your management and staff. With the help of your human resources department, empower your internal team and mainly focus on building a strong sales team. It’s also important that you introduce non-competes for your team.
Determine the True Value of Your Business
When it’s time to sell your business, you need to have your eyes on the prize. With the investments you’ve made and the endless hours of hard work you’ve put in, your goal should be a high resale value. An experienced broker can help you determine your agency’s fair market-related value and offer advice on how to boost it.
A broker will also help you understand the M&A market (mergers and acquisitions). This involves the kind of transactions being done on the market, the prices being paid, and what buyers are seeking. Gaining market intelligence will give you insight into the aspects that influence valuation so that you can best position your staffing agency for sale.
The main factors used to determine the value of a business are cash flow and EBITDA (earnings before interest, taxes, depreciation, and amortization). It’s also important to discuss different estimated valuations under different business sales structures.
Remove Yourself from Daily Operations
Being the only person who knows how to run big-picture operations can be off-putting to potential buyers. If your business hinges on your constant presence and involvement, buyers might reasonably feel they cannot replicate your unique management style.
On the other hand, a staffing agency that can run smoothly if you’re not at the helm signals something important to buyers: it’ll be relatively easy to forge ahead without you and keep daily processes running smoothly.
So, you want to remove yourself from day-to-day operations as much as you can. Document your standard operating procedures (SOPs) for all employees to follow. This can also serve as a roadmap for the new agency owner.
Don’t Neglect Your Business During the Process
Don’t let the decision to sell your business sidetrack you from your agency’s daily operations. If your revenue decreases in the months leading up to the sale, buyers will have the leverage to ask for a lower price.
So, be sure to have a functional organizational system in place with a strong team of reliable personnel. Be clear on who is running the business and who will be at the negotiation table. Also, curb any possible uncertainty regarding your exit, as prospective buyers are willing to offer more for a business that maintains long-standing revenue with a sound exit plan in place.
Choose Lonnie Veasley Business Broker to Sell Your Staffing Agency
Importantly, you want to work with a broker specializing in the highly-volatile staffing industry. Call Lonnie Veasley to get the conversation started. Lonnie has unique expertise and key contacts in the staffing industry. His team will go the extra mile to understand your business, provide a fair, market-related valuation, and develop a roadmap to ensure a smooth transition and successful transaction.
