M&A volumes in the UK Human Capital sector show sustained acquirer appetite.

40 deals in the UK in the last year alone.

The UK recruitment sector has seen 72 M&A deals in the last 24 months as economic conditions remained unexpectedly benign despite significant political uncertainty. The findings from LM&A firm Livingstone, show that the ongoing Brexit negotiations have thus far led to little more than a short-term blip in M&A activity for the sector.

Continued growth in M&A volumes has been driven in part by the emergence of Asia Pacific acquirers, particularly those from Japan. Asia Pacific buyers of UK assets made up 13 per cent of total UK deals by strategic acquirers in the last 24 months, up from the 4 per cent of in the 24 months prior.

Livingstone’s research found that both strategic and Private Equity appetite for the recruitment sector have returned to pre-crisis levels and volumes have grown by 167 per cent when comparing the last two years to the same two year period ten years ago. This reached a crescendo in the last 12 months with 40 deals completed to Q2 2019 – 22 transactions were completed by strategic acquirers and 18 by Private Equity investors – indicative of the shifting perception of the value that can be added by professional recruiters that place the client at the core of its proposition and add real value. These volumes are in stark contrast to the 27 publicly reported deals 10 years ago, between 2008 and 2009.

“The UK’s reputation as the most developed recruitment market remains attractive to global acquirers who are looking for cutting-edge expertise and access to deep pools of specialist talent,” commented Lewis Gray, associate director at Livingstone. “The boost in investment from Asia Pacific and Japan in particular, is testament to the stability of the UK market, both financially and culturally, providing a natural interim step for international groups with wider ambitions to expand into the US and Europe.

“Whilst the future of the UK looks uncertain, a decade of relative economic prosperity should fill investors with confidence in the sector,” he added. “The surfeit of capital, superior returns and the low interest environment is likely to protect mid-market M&A from the volatility traditionally associated with this late stage in the recruitment cycle.”

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