Private equity activity is helping the UK’s recruitment sector buck the trend of declining M&A activity that has been seen across many other industries so far this year. During the first half of 2023, the recruitment sector recorded its highest level of deal activity since 2021, when M&A was booming in the wake of the COVID-19 pandemic.
According to the annual BDO Recruitment M&A H1 2023 report, there were 19 transactions in the recruitment sector between January and June 2023, up from 18 in the first half of 2022 and 17 during the second half of last year. Activity so far this year puts 2023 on track to come close to the 40 deals seen during 2021 – the highest level in a decade.
This increase comes amid an overall decline in UK M&A deal volumes and value. The report found that much activity in the recruitment sector was driven by private equity, with 47 per cent of deal during the first half of the year involving a private equity buyer.
Other factors seen as contributing to the resilience in recruitment dealmaking have been growing interest in technology, labour shortages driving activity in areas including healthcare, transport and logistics, as well as increased activity in areas such as education, energy and engineering.
Commenting on the findings, BDO LLP M&A Managing Director James Fieldhouse said: “Against a challenging backdrop, M&A within the UK recruitment market has held firm during 2023, demonstrating the resilience of the sector. This strong performance also bucks the trend of the overall UK deal market, which has seen a slight decline in deal volumes as macro-economic influences have impacted overall activity.”
“One stand out aspect from these figures is the record levels of private equity investment in the recruitment sector. This shows a sustained appetite from private equity, as investors continue to deploy capital into the sector. This includes a focus during the period on bolt-on M&A activity, where investment has supported portfolio companies to drive inorganic growth, providing further scale, access to new territories, or access to new service lines.”
However, despite the sector’s strong M&A performance, Fieldhouse added that there were several looming threats facing recruitment, with economic uncertainty beginning to hit recruitment levels, along with low unemployment levels.
Fieldhouse added: “Although the effects of skills and labour shortages are still being felt, the tougher conditions are finally meaning the jobs market is starting to cool, with pay growth easing, vacancy numbers dropping, and redundancies rising.”
Read more about M&A in the recruitment sector.
Read about how the retail sector is also bucking the trend - with M&A reaching a five-year-high over the past year.
Specialises in the initial recovery and drying out of water damaged buildings, as well as offering mould remediation services. Offers 24-hour call outs and emergency response services.
Offers an extensive range of roofing and building services, ranging from minor works to major, multi-trade construction projects.
Highly regarded service provider operating for over three decades with complete transparency and an ethical approach. Offers recruitment services for organisations across the region, sourcing commercial, executive and blue-collar operatives. Retains...
Business Sale Report is your complete solution to finding great acquisition opportunities.
Join today to receive:
All this and much more, including the latest M&A news and exclusive resources
These cookies are necessary for our website to function properly and provide you with access to all features.
These are analytics cookies that help us to improve the way our website works.
These are used to improve the functional performance of the website and make it easier for you to use.