Florida company buys Petaluma staffing firm

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In a deal that underscores the strength of the North Bay labor market, a Florida company has recently purchased a longtime Petaluma employment services firm and plans to grow in the hyper-competitive market.

Orlando-based Kavaliro officially moved into its new office on Wednesday after completing its May purchase of Hynes & Co., a longtime staffing firm operated by Smokey and Jane Hynes that built an almost $7 million business through contracts with businesses such as the Petaluma Health Center.

Kavaliro — the word for “knight” in the artificial language of Esperanto — looks to more than double its local workforce from more than 40 to 100 employees within the next 18 months, said Mark Moore, president.

The staffing firm provides information technology and finance workers to companies, including those in the Fortune 500. But those workers remain employees of Kavaliro, which provides all the benefits and makes decisions on raises and termination. Kavaliro now has about 400 employees — which includes contract workers and administrative staff — since its founding in 2010 and is generating about $60 million in annual revenue, said John Mahoney, chief operating officer.

It acquired Hynes’ staff and contracts. Financial terms were not disclosed.

The goal with the purchase is to inject “more Red Bull into the office” by leveraging its resources, Moore said, whether the use of apps by recruiters and heavy spending on job boards or by its expertise in contracting, especially in the defense sector.

The company purchased Hynes because it enabled Kavaliro to build on relationships the Petaluma company had forged in the local market rather than starting anew. Kavaliro did the same when it went into the Washington, D.C., market by buying a local firm.

“We found a great advantage that we could hit the ground running with an acquisition. We are going live with 40-plus employees. To get to zero to 40 is a lot tougher,” Mahoney said.

The market for employment services is competitive in Sonoma County, where major national firms such as Adecco and Manpower and well-known local providers such as Sonoma-based Nelson vie for talent. Finding skilled workers is increasingly hard, with unemployment hovering near an eight-year low in Sonoma County.

“It’s incredibly tough. One of the reasons we looked at this acquisition is because Hynes had a very longstanding and a very solid reputation in the area,” Moore said, noting the least tenured employee at Hynes had six years with the firm.

“There’s almost no business that doesn’t use a staffing company,” Moore said.

Kelly Hartman, senior vice president for Nelson, said she has seen a strong demand for candidates in areas such as manufacturing and retail and into “almost anything” because of the low unemployment rate. Nelson has had an office in Petaluma since 1991, an area where others pulled out after the financial crisis. The North Bay Business Journal last year ranked Nelson as the largest employment services company on the North Coast, with Hynes and Co. placing sixth.

“Our business model is a close touch with our clients and our candidates,” Hartman said. The company’s founder, Gary Nelson, is an investor in Sonoma Media Investments, which owns The Press Democrat.

Nationally, the practice of outsourcing employment services has drawn criticism that it does not benefit workers. For example, some workers at Microsoft have protested their “permatemp” status for doing the same work but without the same benefits as workers at the Seattle-based software company, and they have attempted to form a union. The AFL-CIO estimates that there are more than 7.7 million self-employed and temporary workers in management, professional and related businesses.

The Petaluma location was a distinct advantage, Moore noted, because the cost for commercial office space as well as housing for its employees is much more affordable than in San Francisco. In addition, the North Bay location can easily handle clients throughout Northern California, he said.

Despite being a newcomer, Moore said he sees opportunities because the state’s business climate is open to new entrants, given its long history of a migrant workforce and its role as a hub for innovation as the tech capital of the world.

“California sort of welcomes new companies, new people, new ideas, like no other state in the union,” he said.

You can reach Staff Writer Bill Swindell at 521-5223 or bill.swindell@pressdemocrat.com. On Twitter @BillSwindell.

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