I have helped people buy and sell recruitment companies for over 20 years now. Those years have built connections with lots of good people and a love of the industry itself.
The sale process can highlight the very best, but also the less than great, internals of a selling organisation. When asked about the selling process and due diligence, we have plenty of examples that do not meet the standard required by the acquirer. There is nowhere to hide, especially with a contract recruitment business. A negative history with state and federal agencies, terms of business and contracts that are not sufficient, poor margin management, and lax compliance all stand out.
One business practice in the industry that I have never been very comfortable with is the use of fourth parties to employ contractors. Recent court cases and growing uncertainty around contracted employee relationships and obligations make this a strong topic of conversation in the industry.
My strong view is that three parties in any business transaction is plenty. A fourth party adds unnecessary complexity, can expose you to added risk, and I cannot see the corresponding benefit. But, most importantly in my view, a fourth party distances you from the valuable assets of your business; your hard-won relationships with clients and candidates. All those thousands of hours nurturing trust – all documented in your valuable CRM. They are your clients and your candidates; your provable relationship with them is a large part of the value in your business.
Using a fourth party contract management organisation can appear to be very sensible to many recruiters. They seem to take away all those issues that are difficult to master and complex to implement for paying contractors and invoicing clients. But sometimes an “easy” option can also be the wrong option.
We came up with a better way for recruiters to manage the three critical aspects of performance, complexity, and compliance. We started Middle Office to take care of all of it for you but, and this is the big difference, you get to own the contractors and client relationships.
Working with Middle Office, your contract recruitment environment will have improved compliance, allow you to have a more robust and efficient relationship with your clients and contractors, and save you money.
Middle Office is not an outsourced solution in the traditional sense, we work next to you, an integral part of your organisation. Think of it like shared services. A bit like how some agencies offer managed recruitment services to their clients. The cost of great expertise and technology is split between multiple clients.
Your clients and candidates will get specialist service and make you look great. And we charge a low fixed fee for our service, not a percentage of the invoice.
Then when it comes time to sell your company you can focus on getting the best value for all your hard work being a great people-person.
Rod is a 40-year veteran of Australian and international IT and corporate advisory organisations. His executive-level credentials traverse many segments of the staffing and recruitment industry and include corporate advisory assignments, mergers and acquisitions mandates, and advisory to multinational and other public and private organisations. Located in Perth, Rod provides local industry acumen and global knowledge to recruitment agencies internationally.