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Staffing Business Valuation Guide: What Is Your Agency Worth?
The number one mistake staffing owners make is thinking their business is valued on revenue. It is not. Buyers care about gross profit. Here is how to figure out what your agency is actually worth.
Staffing / Recruiting
2.0x-3.2x SDE
12 min read
Updated September 2026
Legend Atty · Founder, BridgeBook
53 businesses sold · $105,000,000+ in total value·Updated September 30, 2026
Gross Profit vs. Revenue: Why It Matters
Wrong Way: Revenue Multiple
You bill $5,000,000 per year. Someone tells you staffing companies sell for 0.5x revenue. You think your business is worth $2,500,000. This is misleading and almost always wrong.
Right Way: Gross Profit to SDE
You bill $5,000,000 but pay $4,000,000 in wages. Your gross profit is $1,000,000. After operating expenses, your SDE is $300,000. At 2.9x, the sold median, your business is worth $870,000. This is how real deals work.
Here is why gross profit matters: a staffing company is basically a pass-through for worker wages. If you bill a client $25 per hour and pay the worker $20, your real business is that $5 spread. Everything else is just money flowing through your bank account.
Buyers know this. Every serious buyer in the staffing industry will ask for your gross profit breakdown before they look at anything else. If you show them a revenue number, they will immediately ask what your margins are.
Want help calculating your true gross profit? Our free valuation calculator walks you through it step by step.
The Specialization Premium
Not all staffing businesses are valued the same. Your specialty has a big impact on your multiple:
- Healthcare staffing, Highest demand. Nurses, therapists, and allied health professionals are always needed. Healthcare staffing firms sell at the top of the 2.0x-3.2x SDE range because of recurring demand and high margins.
- IT and technology staffing, Strong multiples, near the top of the range. Tech companies always need contractors, and the bill rates are high. Specialized technical recruiters are hard to find and valuable.
- Engineering and skilled trades, Growing demand, especially in manufacturing and construction. These firms sell in the upper half of the range because of the difficulty in sourcing specialized talent.
- Accounting and finance staffing, Steady demand with seasonal peaks. Firms in this niche sell in the upper half of the range, especially if they do both temp and direct-hire.
- General light industrial staffing, Lower multiples, near the bottom of the 2.0x-3.2x SDE range. This is the most competitive and commoditized segment. Margins are thin and client switching is easy.
Valuation examples
These are made-up examples built on sold-deal ranges (2.0x-3.2x SDE):
Small General Staffing
$220,000 Total Value
- Revenue: $2,000,000
- Gross Profit: $400,000
- SDE: $100,000
- Multiple: 2.2x
- Value: ~$220,000
Light industrial temp staffing, owner is primary recruiter, 3 clients, no ATS system.
Specialized IT Staffing
$900,000 Total Value
- Revenue: $4,000,000
- Gross Profit: $1,200,000
- SDE: $300,000
- Multiple: 3.0x
- Value: ~$900,000
IT contract staffing, 4 recruiters, 15+ active clients, modern ATS, owner manages but does not recruit.
Multi-Branch Healthcare
$1,920,000 Total Value
- Revenue: $12,000,000
- Gross Profit: $3,000,000
- SDE: $600,000
- Multiple: 3.2x
- Value: ~$1,920,000
Healthcare staffing, 3 branch offices, 10 recruiters, strong hospital contracts, owner is fully removed from recruiting.
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What Drives the Multiple Up and Down
Multiple Boosters
- High percentage of contract/temp revenue (recurring)
- Industry specialization with strong niche expertise
- Diversified client base, no single client over 15-20%
- Internal recruiting team that operates without the owner
- Modern ATS with clean candidate and client data
- Growing gross profit year over year
- Written client contracts with defined terms and rates
Multiple Killers
- Owner is the primary recruiter or salesperson
- Single client concentration over 30%
- No specialization, competing on price alone
- High internal staff turnover
- Declining gross profit margins
- No technology systems or documented processes
Common Valuation Mistakes
These are the errors we see most often from staffing business owners:
- Using revenue multiples instead of gross profit multiples, This is the biggest mistake in staffing valuations. A $5,000,000 revenue staffing company is not worth $2,500,000 just because someone said the multiple is 0.5x revenue. The correct approach is to calculate SDE from gross profit and apply the earnings multiple.
- Not separating temp margin from perm fees, These two revenue streams are valued differently. Temp and contract staffing is recurring and gets a higher multiple. Perm placement fees are one-time and get a lower multiple. Lumping them together gives you an inaccurate valuation.
- Overvaluing the candidate database, Your ATS database has value, but it is not a separate asset that gets priced on top. It is already reflected in the earnings multiple. A clean, active database helps your multiple, but it does not get added as a line item.
- Ignoring workers comp and insurance costs, In staffing, workers comp insurance is a major cost that affects gross margins. Make sure your gross profit calculation properly accounts for all direct labor costs including workers comp, payroll taxes, and benefits.
Frequently Asked Questions
What multiple do staffing businesses sell for?
Most staffing businesses sell for 2.0 to 3.2 times SDE, calculated from gross profit, with a median near 2.9x, based on sold deals. General temp staffing typically falls in the lower half of that range, specialized staffing near the top, and healthcare or IT staffing firms with strong recurring revenue reach the top, about 3.2x.
Why should I use gross profit instead of revenue to value my staffing business?
Because most of your revenue goes straight to worker wages and payroll taxes. If you bill $3 million but pay $2.4 million in wages, your actual business is the $600,000 in gross profit. Using revenue multiples would dramatically overstate your value. Buyers always look at gross profit for staffing companies.
Does specialization really affect my staffing company valuation?
Yes, significantly. A general light industrial staffing firm might sell for 2.2x SDE. A specialized healthcare staffing firm with the same SDE could sell for 3.0x-3.2x. Specialization means higher margins, stronger client relationships, harder-to-replicate expertise, and more predictable revenue.
How do I calculate SDE for a staffing business?
Start with gross profit (revenue minus direct labor costs including wages, payroll taxes, and workers comp). Then subtract operating expenses (rent, internal payroll, technology, marketing). Then add back your salary, personal expenses, and any one-time costs. The result is your SDE.
Is my staffing business worth more if I have temp and perm placement revenue?
Generally yes. Temp and contract staffing provides recurring revenue, which buyers value highly. Perm placement provides high-margin one-time fees. A mix of both gives buyers predictable baseline revenue plus upside from placement fees, which can command a stronger overall multiple.
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What Is Your Staffing Business Worth?
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