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M&A Activity in the recruitment sector

Posted on 22 September 2017

Recruitment M&A Activity

As with most sectors, the longer term impact of Brexit on the recruitment sector remains uncertain. Recruitment firms which are heavily reliant on those industries that benefit from the UK's membership in the single market – financial and professional services being two obvious examples – face potential challenges ahead. 

Nonetheless, the outlook is not gloomy for M&A in the recruitment sector. Record employment levels are ensuring that high quality recruitment businesses with strong management teams continue to attract interest from both strategic buyers and private equity. The weak sterling is also attracting buyers from overseas, most noticeably from Asia and the US.  

We are seeing particularly strong deal activity in the £5m-£50m range, with small and medium sized companies taking advantage of the current climate to add scale or exit.  Notably, we are noticing the acquisition of businesses with international offices, and we expect this trend to continue as UK-based recruitment businesses seek to hedge against the potential risks of Brexit – of particular interest will be businesses with European offices in countries like Ireland and Germany.

Aside from Brexit, in our opinion, the impact of technology and the sharing economy on recruitment businesses has yet to be fully realised, but is likely to have a significant effect on it going forward. It is our view that most recruitment firms have yet  to fully develop a strategy to capitalise on technology in the sector and it will be interesting to see developments in this regard over the coming year.

In recent months, Mishcon de Reya's Corporate team has acted on the following publically disclosed transactions in the recruitment sector:

  • advised Staffing 360 Solutions, Inc. on its acquisition of CBS Butler Holdings.;
  • advised nGAGE Specialist Recruitment Limited (which manages a consortium of recruitment companies, bringing together specialist, high potential recruitment businesses) on:
    • the management buy-out of GCS Recruitment Specialists (a technology-focused recruitment business with operations in London, Reading, Dublin and New York); and
    • its acquisition of 85% of the issued share capital of Qu Recruitment Limited (a recruitment consultancy specialising in procurement, supply chain, bid and HR vacancies on both an interim and permanent basis),
  • advised the management on the secondary buy-out of Search Consultancy by H2 Equity Partners.
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