When planning a future exit for you from your business, it is advisable to look at the recent past and try to understand the market for similar organisations.
NumberMill looked at Merger & Acquisition data from the recruitment sector and found a significant increase in M&A deals featuring foreign investment with 28% of deals in 2022 featuring a UK agency being acquired by international buyers. This is up from 8% in 2021, possibly representing the post-Brexit landscape settling and domestic markets being less attractive in a post-pandemic world.
Across all sectors, UK M&A’s were down over 10% compared to 2021 but still represent historically strong numbers and Recruitment M&A reflects this trend. Although down against the flurry of activity in 2021, there was still more movement than on average throughout 2019-20.
The largest recruitment related M&A area of 2022 was Recruitment Software / Platforms with over 30% of the deals done, unsurprising in our current app-driven world. For recruitment businesses themselves, IT held up as an attractive prospect for buyers (arguably for the same reasons as the Software Platform businesses) but the strongest sector were generalist agencies with over a quarter of all Recruitment related M&A deals. STEM agencies came in third but with less than 10% of the overall numbers.
What must also be noted is that the average EBITDA (Earnings Before Interest, Tax, Depreciation and Amortisation) to Enterprise Value (EV) has dropped significantly during the first quarter of 2022 with peaks in mid-January.
It has been suggested that this, like many of the financial woes faced by businesses and individuals this year, are due to the Ukraine situation but this could also mirror the housing market experience with a surge of purchases post-lockdown driving prices up.
The EV/EBITDA multiples seem to have settled around 6x post-March onwards.
If you are contemplating an exit, NumberMill Accounting as a specialist accountant to the recruitment industry is well placed to help prepare your business for sale in the best light, ensure the buyer due-diligence process will not discover unexpected liabilities and advise you on your personal tax affairs and the most advantageous way of moving forwards.
For a confidential discussion on the subject, please contact us using the details below and speak to one of our specialists:
Call us: 0333 121 2001
Email us: enquiries@numbermill.co.uk
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