How do I check a staffing agency’s client concentration before buying?

Start with the data. A report of revenue and margin by client, plus placements by client, shows who matters. Look at the trend: has a main client grown, shrunk, or begun to use a rival? Ask what portion of work was won by the seller personally and what came through the office team.

Next, read the agreements. Look at term, rate review, who may end it and how fast, and any exclusivity or preferred-supplier status. Ask whether a change of ownership needs the client’s consent. Staffing clients can review their suppliers regularly, so ask how recently each last did so and what the result was.

Also consider the people. Agencies depend on recruiters and on candidate pools. If a recruiter manages a major client, that person may be the actual relationship. Ask whether they have signed non-solicitation terms, and whether they plan to stay. Your lawyer can advise on those documents. A call with the key clients before closing, with the seller’s consent, is often the most telling step. Ask how the agency handles a client that wants to hire its workers directly, because that practice can quietly erode revenue.

Key takeaways

• Get billings and margin by client across several periods.
• Find out which relationships belong to the seller and which to staff.
• Check contracts for consent and termination rules.
• Ask whether key recruiters will stay and what they have signed.