What a buyer asks for first
- Gross margin by client and by role, month by month
- Top clients, contract terms and any vendor list or preferred status
- How workers are classified, and your payroll tax filings
- Credentialing records and compliance files for placed staff
- Recruiter tenure and who owns client and candidate relationships
Gross Margin Is the First Number
Staffing firms are measured by what is left after paying the people they place. A buyer looks at gross margin by client and by role, and at how stable it has been.
Declining margins signal a price war, and rising ones raise questions about how workers are classified.
Client Concentration Rules Everything
If one hospital system or research company supplies a third of revenue, a buyer will discount the price or tie part of it to keeping that account.
Preferred vendor status helps, but many such contracts can be rebid. Read the terms about assignment and change of control.
Spreading revenue across more clients is one of the strongest moves in the years before a sale.
Worker Classification and Payroll
Buyers check how workers are paid and reported. Contractors who should be employees create tax and wage exposure that follows the company. A clean payroll history, with filings that match, supports your price.
See withholding final returns after you sell for the state side after closing.
Credentials and Compliance
Placing nurses, technicians or research staff means verifying licenses, health records and background checks. Buyers ask to see the files. Gaps are expensive to fix and easy to find.
Recruiters and Relationships
A firm's candidate database and its recruiters are worth money, but only if they stay. Buyers watch who holds relationships, and they often want non-solicitation terms and retention bonuses for the top recruiters.
- Keep a documented process for sourcing and screening candidates
- Give account managers real ownership of client relationships
- Record every placement so a buyer can see repeat business
Pricing and Structure
Staffing firms trade on adjusted cash flow, and structure often includes a note or an earnout because of concentration risk. Our guide on what your business is worth to a buyer explains the math, and a free valuation check gives you a range.