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UK – Recruitment sector reports strong M&A outlook

18 December 2014

Almost half of all recruitment firms are considering making an acquisition over the next three years, as post-recession growth is firmly back on the agenda, according to the Recruitment 2015 report from business advisory and accountancy firm BDO.

More than four-out-of-10 (46%) of recruitment consultants surveyed believe that M&A was on the cards for their business within the next three years as a way of achieving growth ambitions and expanding their service portfolios. Whereas 41% also think that their business is likely to be sold or go through an exit in the next five years.

Steve Woolmer, Director in the Professional Services team at BDO, commented: “Deal activity is on the rise for recruitment firms. The market is picking up as the economy emerges from the other side of the recession and many businesses are looking at growth. A strategic merger is a good option for those who want to expand the services that they offer clients, or diversify in to a different sector.”

“There is certainly positivity in the air and those who are ambitious enough to pursue transformative growth strategies are likely to emerge as winners,” he added.

However, securing top talent and the continuous drive for new business are key barriers to growth. A snapshot of views from senior management in the recruitment sector found that attracting the right staff to their own businesses is a primary concern for almost two-thirds (57%) of recruitment bosses.

Mr Woolmer added: “The availability of quality consultants and attrition are cited as the most common complaints, and as a result, incentivising staff is paramount to attracting and retaining top talent.”

A fifth (21%) of bosses in the recruitment sector also claimed that continuous pressure to win new business was a major concern, something that has dominated for many years. The drive for new business has meant that recruitment firms must understand the sectors in which they operate, and consider the areas in which they want to diversify into.