RECRUITMENT STILL HOT WITH INVESTORS

The recruitment sector remains attractive to investors despite looming political and economic challenges thrown up by Brexit, according to accountants and business advisers BDO’s 2018 Recruitment Sector Insights report.

The recruitment sector remains attractive to investors despite looming political and economic challenges thrown up by Brexit, according to accountants and business advisors BDO’s 2018 Recruitment Sector Insights report.

And even if the economy weakens in the immediate aftermath of Brexit, the report’s author says that many staffing businesses will continue to interest investors.

The report says that despite many economists expecting the market to flatline over the next three years as a result of Brexit-induced economic and political uncertainty, “until the political landscape smooths out”, investor appetite for firms in the sector remains strong.

And although the total number of deals in 2017 (22) was a fall from the five-year high of 27 in 2016, the UK comfortably retained its position as the second most active region globally for mergers and acquisitions behind the US (48).

James Fieldhouse (pictured), director mergers & acquisitions at BDO, told Recruiter he wasn’t surprised that the UK staffing sector continued to see investment and buy-out activity “given the number of quality assets and strong operators that exist in the UK market”.     

The report attributes the sector’s continued attractiveness to several factors:

  • continued growth in the UK recruitment market
  • employment at a 40-year high.
  • a high level of private equity interest especially in niche recruiters in growing markets.
  • a strong interest from overseas investors driven by the fall in Sterling, making UK assets more attractive.
  • existing managers’ willingness to take part in management buy-outs.

Even if the economy falters after Brexit, Fieldhouse says many recruiters will remain attractive to investors.

“Those businesses which are able to adapt to changing market conditions following Brexit and prosper will continue to attract investment,” he says. “As noted in the report, the service sector skills shortage is at its worst level in two decades, so those recruiters who are able to help plug this gap through intelligent hiring or potentially through training provision as part of their service proposition will be in much demand. 

“Additionally those sectors characterised by shortages of skilled labour will remain attractive to investors, e.g. we expect further consolidation and investment to occur in the education, IT and technology/digital sectors.”

 

 

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