UK Deals double

As Global recruitment M&A holds steady 

2021 deal volumes in the UK recruitment sector reached a decade high, outpacing the last peak in 2018 of 38 transactions. There has been a sustained level of investor interest with private equity playing a role in a quarter of UK recruitment deals.

UK recruitment revenue also recovered above pre-pandemic levels to £16.8 billion and FTSE listed recruiters ended 2021 ahead of their starting position for the year. Looking ahead, the sector predicts 5.8% growth over the next five years.

The annual BDO M&A Review: Recruitment report highlights the fact recruitment platforms and software deals continue to drive activity in a remote working environment. However, there has also been a marked uptick in activity for growth sectors including IT and recruitment agencies, as well as a focus on more traditional industries such as engineering, construction and industrial.

James Fieldhouse, M&A Managing Director at BDO LLP, said: “Talent attraction and retention is at the top of most boardroom agendas. As the economy re-emerges, ‘the culture” of an organisation and job satisfaction, recruiting and retaining people with the right skills to deliver on business strategies has become increasingly difficult and expensive. There’s a firm focus on recruitment, which presents considerable growth opportunities for the sector.”

Private equity investment has continued to play an active role in UK recruitment deals this year, accounting for a quarter of UK deals, down from a third in 2020. Although this level is down on 2020 in % terms, in absolute terms there has been a marked increase of 43%, to ten PE backed deals in 2021. There was also a significant increase in acquisition activity by trade buyers, up 188% on 2020 levels to 23 total deals with UK involvement, as firms revert to a less cautious reserves strategy.

Fieldhouse added: “In terms of deal trends, it’s also pleasing to report, despite the adversity and potential barriers caused by the global pandemic and Brexit, that the UK remains a country of key interest for overseas acquirers and investors. 2021 exceeded all expectations, so we start 2022 with real momentum and a strong platform from which to grow. We’d expect the M&A environment will continue to thrive, with many factors pointing towards this being the case. However, this bullishness should, as ever, be cautioned by external events and macroeconomic influences which might come into play to de-rail this activity in future months, such as recent downgrading of recruitment stocks, IMF reducing UK growth prospects, inflation and interest rate rises. As such, we cautiously look forward to the rest of the year and hope that 2022 promises to be another active year.”

This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Accept Read More