“Our clients want to appeal to the widest possible demographic possible to sell their products, so diversity is very important to them from a marketing perspective.”
Whether being a diversity-owned staffing firm can affect future plans for owners to sell their firms depends, says Akash Taneja, managing director, De Bellas & Co., an investment bank that works with staffing firms on M&A transactions.
Sometimes a firm will have diversity status and not rely on that status to win client contracts, Taneja says. In that case, there’s no impact. And if a firm does rely on its diversity status to win a client contract, having such status can be less crucial if the client comes to rely on the firm and is getting excellent services.
Still, for those firms that depend on client contracts obtained through their diversity status, there’s good news when it comes to selling.
“There was a time in the past, years ago, where you really had a very small universe of diversity status buyers that were out there so it really made selling a diversity staffing business quite difficult if they had dependency on that diversity status,” Taneja says. “But nowadays that has diminished quite a bit because many more qualified buyers have diversity status.”
It’s also still possible to sell a diversity business with contracts dependent on that status to a nondiverse larger firm, he says. However, that requires more creativity. For example, a seller may have to retain a 51% stake in his or her firm in order to keep the diversity status, and he or she would not be able to exit the company.