Staffing agencies in Illinois are typically valued at 3x to 6x SDE or 0.5x to 1x annual gross profit (not gross revenue). Revenue figures for staffing businesses are inherently misleading — a $10M staffing agency with 15% gross margin is less profitable than a $3M agency at 35% margin. Gross margin, not revenue, drives valuation.
Temporary vs. Permanent Placement
Temporary and contract staffing generates recurring revenue through ongoing billable hours. Permanent placement (direct hire, retained search) generates higher margin per placement but is project-based and non-recurring. Mixed-model agencies are common; the ratio of temp-to-perm revenue affects how buyers value and finance the acquisition.
Client Concentration and Industry Focus
Staffing agencies serving a single industry — industrial, healthcare, IT, administrative — command premiums for their specialization and deeper client relationships. General staffing agencies face more commoditized competition. Client concentration analysis (no client over 20–25% of revenue) is standard buyer due diligence.
Workers' compensation claim history, compliance with Illinois pay and hour laws, and E-Verify status are all reviewed carefully. A clean compliance history is essential to maintaining client relationships and avoiding deal contingencies.