November 20, 2015 – AMN Healthcare Services, a provider of healthcare workforce solutions and staffing services, has entered a definitive agreement to acquire healthcare-focused executive search firm B.E. Smith for $160 million in cash.
The transaction is structured to allow AMN Healthcare to realize tax benefits having an estimated net present value of approximately $25 million. The purchase price is expected to be funded through a combination of term loan borrowings and revolver draws under the company’s credit facility. The acquisition, subject to regulatory approvals and customary closing conditions, is expected to close in early next year.
“With increased demand and the evolution of new care delivery models, healthcare clients are faced with the critical challenge of recruiting the key executives and talent needed to lead the dramatic transformation their organizations are experiencing,” said Susan Salka, AMN Healthcare president and CEO. “The added strength of B.E. Smith’s recruitment expertise and nationwide talent pool of healthcare leaders and executives further increases the strategic value that AMN Healthcare delivers to clients through our breadth of innovative workforce solutions.”
Founded in 1978, B.E. Smith is a full-service healthcare interim leadership placement and executive search firm. For nearly a decade, it has been recognized annually by Modern Healthcare as one of the top search firms in its sector. The firm places interim leaders and executives across all healthcare settings, including acute care hospitals, academic medical and children’s hospitals, physician practices, and post-acute care providers. The firm is currently generating annualized revenue of approximately $100 million with an adjusted EBITDA margin of 15 percent.
“We are pleased to carry forward the legacy and strength of B.E. Smith as part of AMN Healthcare’s prestigious recruitment and workforce solutions brands,” said president and CEO Doug Smith. “The combined services of AMN and B.E. Smith provide increased value for all clients through an expanded network of quality healthcare leaders and a suite of workforce solutions offerings that are differentiated in the healthcare industry.”
The deal comes on the heels of AMN Healthcare Services’ acquisition of MillicanSolutions, a physician and executive leadership search firm focused on serving academic medical centers and children’s hospitals nationwide. That acquisition included cash payments totaling $4 million.
There’s been a host M&A activity in the executive recruiting field in recent months, including Options Group acquiring Whitney Correlate’s business, Heidrick & Struggles acquiring Co Company and Korn Ferry entering into a definitive agreement to acquire Hay Group.
But healthcare is among the most rapidly growing employment fields, and more consolidations in this part of the recruiting sector are expected, according to analysts at Hunt Scanlon Media who track trends in the executive search and talent management business. “The healthcare industry is in the midst of a turbulent transformation,” said Scott A. Scanlon, founding chairman. “That makes the need for proven and experienced boards and executive teams with vision more important than ever.”
The U.S. Department of Labor’s Bureau of Labor Statistics reported that healthcare employers added 45,000 new jobs last month. On average, the industry has hired nearly 40,000 new employees each month in 2015. Within the industry, employment growth continued in ambulatory healthcare services (+27,000), and in hospitals (+18,000). Over the past year, healthcare has added 495,000 jobs nationally.
To meet these growing needs, B.E. Smith expanded its services with the launch of a post-acute services division this past summer. The firm has placed increased focus on meeting the leadership needs of inpatient and outpatient rehabilitation facilities, long-term acute care hospitals (LTAC/LTCH), skilled nursing centers, as well as home health and hospice agencies.
Contributed by Scott A. Scanlon, Editor-in-Chief, Hunt Scanlon Media