The signs are all over the place. As an article penned for CIO Magazine just this week points out, "approximately 32 percent of IT organizations are willing to offer a 10 percent to 15 percent salary increase to currently employed IT professionals in an effort to attract elite talent." Last month, shares of TeamLease Services jumped on news that it has acquired a Bangalore-based IT staffing solutions firm. Earlier last month, North Carolina-based BlueLine Associates acquired the technology division of staffing firm BlueStaff as a means of getting deeper into the IT staffing game.



It all points in the same direction... information technology staffing is a massive growth opportunity, and the companies in the business are very much in a sweet spot. If they're not buyout targets, they're positioned for oversized growth.



Problem: Just because an investors can see a trend/opportunity doesn't mean they can invest in it. How does one make an "IT staffing trade?"



As it turns out, there is a way. It's Staffing 360 Solutions Inc (NASDAQ:STAF).



Staffing 360 Solutions isn't a household name.... yet. Then again, it shouldn't be. The company it is today has only been around for a couple of years now, and has only been listed on the NASDAQ exchange for about a year. It takes time for the market to "find" a young company. But, what a company the market will find once the masses starting proverbially putting two and two together.



The definition of a roll-up isn't a hard and fast one, though even the broad brush strokes paint a pretty clear picture. Investopedia defines a roll-up (also known as a "roll up" or a "rollup") a merger that occurs when investors (often private equity firms) buy up companies in the same market and merge them together. Roll-ups combine multiple small companies into something bigger and better to be able to enjoy economies of scale. Private equity firms use roll-ups to rationalize competition in crowded and/or fragmented markets and to combine companies with complementary capabilities into a full-service business.



It's also the kind of strategy Staffing 360 Solutions is executing, with great success.



Last quarter, revenue rolled in at $44.0 million, up 36% year-over-year. EBITDA was $1.0 million, versus an EBITDA loss of $1.9 million a year earlier. The net loss of $2.8 million was much smaller than the prior year's Q4 loss of $4.3 million, and the operational cash flow was basically even, versus negative cash flow of $4.5 million for the same quarter a year earlier. STAF is now into its third year of growth-by-acquisition effort, as expected, the bottom line is growing even faster than the top line... one of the benefits of scale.



The immediate question usually is, how does Staffing 360 Solutions pay for all these deals? [It's done six in the past couple of years, but another 20 or so are on the radar.] That's the brilliance of the plan.



The typical offer STAF has made to an acquisition target is about one-third cash, one-third stock (of STAF), and one-third short-term notes or an "earn-out" based on the company's continued performance. It's the last payment mode that really puts everyone on the same page. Note payments are only made as long as the acquired company continues to produce results. Yet, that same arrangement also allows the target company to financially benefit from wider margins created once the union is completed.



It really is a win-win scenario... for everybody. A little cash, a little stock, and a little incentive can go a long way in the investment community because it's about as fair - and economically sound - as it gets. Companies are willing to join up, knowing they'll be allowed to continue running their business as they have been, yet be part of a bigger entity with more marketing clout. Investors don't mind a little dilution, because they're getting a real revenue bearing asset. Better to conserve the cash.



It's an off-the-radar name, but that's quickly changing. Investors who understand that technology isn't just one industry anymore but the heart of several industries are seeing a solid opportunity in STAF, and its savvy expansion plan.

Investors interested in learning more about Staffing 360 Solutions can visit the company's website here. It's got several investor-centric publications available.