Buying a staffing firm in South Florida

• A spread of clients, with no single client dominating hours billed. Losing one big warehouse account can erase a year's profit.
• Gross margins that hold up when clients renegotiate or put the work out to bid.
• Long-standing clients with written agreements covering rates, payment terms and who is liable for what.
• Few workers' compensation claims and a real safety program for placed workers, which keep premiums down.
• Recruiters with a deep pool of workers, tracked in a proper applicant system rather than in someone's phone.
• Clients that pay on time, with little bad debt.
• A specialty with skilled workers, where clients pay more for the firm's ability to find people.

• Workers' compensation: the job classifications used, claims history, and the experience rating (a score based on past claims) that sets the premium. Make sure placed workers are classed for the work they actually do.
• Payroll taxes. Taking over more than half of a business or its assets can make you liable for the seller's unpaid Florida taxes, including reemployment tax (Florida's unemployment tax), unless you get a certificate of compliance from the Department of Revenue first (section 213.758). A buyer that carries on the business can also take over the seller's reemployment tax record and rate, good or bad (section 443.131).
• How much depends on the biggest clients, and contract terms on who pays for accidents at client sites.
• How long clients take to pay, and any factoring agreements that must be paid off at closing.
• I-9 forms and E-Verify records.
• Overtime and wage compliance, and the risk when clients direct the work.
• Agreements with recruiters and account managers, including non-solicitation terms.

• Who are your five largest clients, and what share of gross margin do they produce?
• What workers' compensation claims have you had in the last five years?
• How do you fund payroll before clients pay?
• Do any clients use you for their whole workforce rather than temporary help?
• How would you find 20 workers if a client needed them next week?
• Which client relationships depend on you personally?
• Have you had any wage, tax or immigration audits?

South Florida covers Miami-Dade, Broward, Palm Beach and Monroe counties: Miami, Hialeah, Doral, Fort Lauderdale, Hollywood, Pompano Beach, West Palm Beach, Boca Raton, Jupiter, and the Florida Keys down to Key West. It's the state's largest metro area and its most international. PortMiami, Port Everglades and Miami International Airport tie the region to Latin America and the Caribbean, which supports a deep base of wholesalers, freight forwarders and logistics firms, many of them near the airport. Tourism and cruises, finance and wealth management, health care, real estate and construction carry much of the rest. Palm Beach County adds wealthy seasonal residents and, out west near Lake Okeechobee, sugarcane and vegetable farms. In the Keys, nearly everything turns on visitors, fishing and boating.

Companies that serve homes, condo buildings and other businesses do well here: the building trades, property services, insurance agencies, medical and dental practices, and professional firms.

Costs run high: commercial rent, wages and, above all, property and windstorm insurance. Price the insurance before you make an offer, not after. Miami-Dade and Broward make up the Florida Building Code's High-Velocity Hurricane Zone, with stricter rules for roofs, windows and structures. That raises building costs, and it also gives steady work to the contractors who know those rules well.

Much of the workforce and many customers speak Spanish as well as English, and a company that works well in both languages has an edge. The winter season matters more in Palm Beach County and the Keys than in Miami. In the Keys, the cost of housing makes hiring and keeping staff one of the hardest parts of running a company. Ask any seller there how they find workers and where those workers live.