Market recovery remains measured: Market data indicate modest growth rather than a broad-based rebound, with 2026F market size of $183.1B (+2%) and deal volume pacing toward ~99 transactions, roughly flat with 2025. Revenue remains well below the 2022 peak of $243.9B, and deal volume compares with 191 transactions in 2021. Skilled trades (+7%) and engineering (+3%) are leading 2026 growth, while health care and IT are posting low-single-digit gains.
Buyer demand is selective: IT, engineering, locums and skilled trades are positioned as the most active niches, as buyers target scarce talent rather than broad labor exposure. Health care remains the most active vertical at roughly 30% of deal volume, highlighted by Cross Country Healthcare ($416M) and Ingenovis Health ($405M). Engineering is the only vertical with positive deal growth from 2021 to 2025, while PE platforms continue to pursue add-ons in IT and skilled trades.
Quality drives valuation: Recurring client relationships, specialized talent pools, margins and technology-enabled delivery remain the key differentiators. Businesses with low customer concentration, strong retention and differentiated recruiting capabilities are attracting competitive interest, while commoditized providers face wider valuation gaps. Investments in sourcing and screening technology are increasingly scrutinized in diligence.
Deal structure matters: Valuation expectations remain achievable for quality businesses, but buyers are using rollover equity, earnouts and deferred consideration to manage risk, with cash at close typically 70-80% in marketed processes. Valuation gaps between sellers and buyers are expected to narrow as interest rates ease and macroeconomic clarity improves. Owners considering an exit should streamline operations and emphasize defensible niches and long-term client relationships ahead of a process.
Key Takeaways
For more information, please contact Chad Gardiner, Senior Managing Director.
