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UK – 16% of recruitment companies struggling to survive

08 August 2013

A recruitment agencies market report from business intelligence analysts, Plimsoll, has uncovered a growing divide between recruitment companies. Analysing the UK industry’s 1,000 “most important companies”, Plimsoll identified 155 companies that need to improve quickly in order to survive.

The majority of recruitment companies (60%) were rated as ‘strong’, according to their latest performance information. A further 9% were rated as ‘good’. With 9% rated ‘mediocre’, an additional 7% were given a ‘caution’ rating. The remaining 16% were rated as in ‘danger’ and struggling to survive.

According to Plimsoll, a number of companies are finding themselves over-stretched and exposed to hostile takeovers. They represent a rare opportunity to acquire one of a number of struggling competitors for a significant discount.

Of the 1,000 recruitment agencies analysed, Plimsoll identified 221 companies as prime acquisition prospects. The highest proportion of companies that would make good acquisition were located in the South West with 30% of the 40 recruitment agencies rated as good acquisition targets. The second highest region was North Ireland with two of their recruitment agencies rated highly as targets. The lowest proportion of vulnerable agencies was in the North West/North Wales region, with only nine of their 75 agencies (12%) rated as good acquisition targets. This was followed by Scotland, with six of their 43 agencies (14%) rated as vulnerable to acquisition.

A further sign of the intense competition within the UK recruitment industry was that 76 companies continued to sell at a loss for the second consecutive year. Plimsoll commented that the serial loss makers are adding to the congestion in the market, often undercutting the rest of the market and driving down profit margins across the board.

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