Contact: Brian Satterfield
In a move designed to bolster its presence in the IT staffing sector, hybrid staffing services provider On Assignment made the largest-ever acquisition in the sector earlier this week when it purchased Apex Systems for $600m in cash and stock. The transaction was also one of the largest credits ever for Wells Fargo Securities, which advised Apex on the sale. Meanwhile Moelis & Company, which got its second $500m-plus print in as many days, worked the buy side of the deal.
Richmond, Virginia-based Apex was an attractive acquisition target for On Assignment both for its growing revenue as well as its sheer size in taking on the larger players in the sector that also handle both traditional and IT staffing duties. Apex, which posted a record $705m in revenue in 2011, more than doubles On Assignment’s total revenue to $1.3bn. (On its own, On Assignment wasn’t expecting to top $1bn in sales until 2015.) Apex had a compound annual revenue growth rate of 30% over the past 12 years and has recovered well from the recession, nearly doubling its own revenue since 2009.
On Assignment claims that the transaction makes it the second-largest IT staffing firm in the US, helping the company to keep its technology practice competitive with some of its much bigger rivals. One such competitor, Adecco, brought in $2.2bn from its IT division alone in 2011, about eight times more than On Assignment’s IT staffing business generated. Apex’s revenue more than triples On Assignment’s IT revenue and helps narrow what had once been a huge gulf between the two rivals. And the company didn’t blow the bank to get the bulk: On Assignment paid 0.9 times trailing sales for Apex, or roughly the same multiple it shelled out when it made its only other M&A move, 2007’s purchase of Oxford Global Resources.