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The M&A gold rush in the recruitment sectors

Published on: 9/14/2022

The recruitment market looks set for a wave of takeovers as the consequences of the last few years increasingly expose companies whose financial performance has been compromised. 2021 already proved to be the most acquisitive year on record, with 38 deals in total, 10 of which are from Private Equity investors. 2022 is following the trend and there is no sign of a slowdown in 2023. 

The pandemic significantly reduced the demand for staff. The post-pandemic, post-Brexit period has seen a rapid decline in the pool of potential employees, even in traditional ‘hotspots' such as London. As a result, almost a quarter of all agencies have seen a significant decline in their financial performance and have been rated by Plimsoll as Caution or even Danger.  

Conversely, there are still pockets of financial strength. More than half of all Recruitment Agencies that Plimsoll have analysed have retained a Strong rating. We know from previous periods of polarisation and from other markets, that those conditions often lead to increased consolidation. 

At Plimsoll, we have performed a comprehensive acquisition study on the recruitment sector and have found various factors in the likelihood of acquisition deals into 2023.  

First, we looked at different specialities across the recruitment sector to identify those that are most likely to see acquisition deals: 


% Attractive 


Chemical Recruitment Agencies 


Rail Recruitment 


Early Careers Recruitment 


Childcare Recruitment 


Construction Recruitment 


Engineering Recruitment 



Interestingly the heavy engineering and educational sectors are seeing the biggest divergence between those in need of recapitalisation and those with the financial resources to acquire them. Watch out for deals predominantly in these sectors as the market struggles to maintain as many players.  

Another clear divergence in the potential for M&A activity is based on overall company size, specifically by turnover. The number of companies that are ripe for takeover appears to be directly correlated to the overall size of the businesses in question.  

Turnover range 

% Attractive Companies 

Sales above £700m 


Sales £700 to £100m 


£100m to £10m 


£10m to £2m 


Under £2m 



Companies at the top end of the size spectrum appear to be more attractive acquisition targets. This may reflect the increasingly international nature of recruitment and the increased demand from Private Equity for large recruitment companies which looks set to continue 

With the realities of Brexit, conflict in Europe, rampant inflation and the worldwide demand for people, the recruitment sector in the UK and across the rest of the world is in a period of change that will in all likelihood lead to continued mergers and acquisitions activity.  

To help our listeners make sense of some of the potential impacts in the recruitment industry we are offering a free insight report looking at business value trends across this market. 

For a free copy of the Insights Report looking at the latest trend in values across the UK recruitment, just email me at c.evans@plimsoll.co.uk and I will get that processed for you immediately.