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We gratefully enter our 18th year in the PEO/HRO industry. 47 deals and over 1,000 projects later, there are several things about which I am certain. The pendulum of life swings - and when it goes too far one way - it will always "adjust" by swinging back. There is an inert balance in the world.
So - why is 2014 a HAPPY year for PEO/HRO Mergers & Acquisitions??
The economy:
- *Financial metrics such as employment, GDP, customer confidence, and home values show steady, albeit slow, recovery. Gradual improvement in market conditions = greater consumer confidence = greater M&A confidence,
- *Buyers are sitting on cash - reserves are looking good for deal flow,
- *Large deals came back in 2013, typically middle market deals, like PEO, follow.
PEO/HRO Industry:
- *PEO valuations are solid. We have seen well run PEOs sell for good value - thus setting the watermark for valuations in 2014,
- *A number of PEO acquisitions were completed in 2012 and the first half of 2013 - those companies are integrated - and buyers are hungry for more,
- *The investment community recognizes that PEO/HRO leaders know how to get deals done and how to make deals accretive - assimilation and integration are proven,
- *Today's PEO/HRO financial and operational model has matured with more predictable cash flow. Value-add services plus proven earnings on risk management, show stability in our industry,
- *Running a PEO becomes more complex every day. Finding a buyer/partner/investor who can take over the administrative "stuff" allows business owners and shareholders to do what they love - sell & service clients,
- *Healthcare - what can we say - PLEASE LET ME GIVE THIS HEADACHE TO SOMEONE ELSE!
- *Baby boomers are getting to the age where they want to "Take some chips off the table" - enjoy life NOW, not when they are too old to do so - what better time?
BOTTOM LINE - The stars are aligned in the economy and in the PEO/HRO industry. Outsourced business service companies, including PEO companies - are HOT commodities! There are more buyers than sellers - valuations are solid - and for many, the time is right. 2014 will be a blast for Silva Capital - let us know if we can serve you - today, tomorrow or in the future!
Look for our next newsletter - "I think I want to sell my PEO - WHAT NEXT?"
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