Owners of ‘me too’ companies can forget their dream of making a successful exit from their staffing business, says Russell Clements, chairman of visual analytics company cube19 and recently-departed chief executive officer of recruiter SThree.

Speaking at a Recruiter event at law firm Charles Russell in London last night celebrating the success of companies in Recruiter’s 2013 FAST 50, produced in association with mergers & acquisitions advisers Boxington Corporate Finance, Clements told the audience: “If you are just another ‘me too’ company, then forget about it.

“The world is full of them, why would I as an investor want to invest in your business?”

Clements, who will be the subject of Recruiter’s March cover profile interview, urged business owners who wanted to attract investors: “Be famous for something and decide what you are, and what you are not. It is better to be the market leader in a smaller market rather than a ‘me too’ company’ in a large market.”

Clements recounted how in 1995 the directors of SThree had sold a 20% stake in the company to a consortium of venture capitalists led by Barclays Private Equity for £50m.

Along with not being a ‘me-too’ company, Clements said the other most important element in making a staffing business worthy of an exit from the point of view of potential investors was ensuring it was scalable and replicable. 

“A business might look great at the moment,” he explained, but investors would only be interested if they were convinced that the business had the potential to grow in other geographies and other sectors.  

He suggested that potential buyers would be impressed if senior managers had equity in the business, as this would help the business continue to grow and develop once the originals owners had departed the scene.

Clements said that although every business owner he talked to “seems to be focused on exiting as their manifold destiny as a owner”, low barriers to entry within the staffing sector meant that “most will not have sufficient critical mass to float or sell. Very few will ever in principle have that opportunity”.

• See the upcoming February edition of Recruiter for more on the FAST 50 celebration evening.