Then time is spent by the key executives of both firms to negotiate the deal and the severance packages for the redundant executives. And then, then comes the hard part. Post deal one has to integrate both firms. That's very difficult to do. Today, staffing firms like Interim, Adecco, and others have many subsidiaries that run on completely different systems and have different business rules.
Different systems make economies of scale almost impossible to realize.
Corporate cultures rarely mesh entirely and that results in key people leaving, people that are a large part of the value of the firm you acquired. You could be some master vendor with low margins but that's not super compelling. The main benefit to industry consolidation was to become a one-stop shop. Because staffing firms tend to be very decentralized, there is very little cost savings with economies of scale. Even with all the detriments of industry consolidation, I think acquisition was the smart strategy in the 1990s because growing businesses organically took too long and left you in significant peril of losing market opportunity.