Thirty-seven per cent of respondents to the first Osborne Clarke/Recruiter recruitment sector mergers and acquisitions (M&A) barometer survey are looking to buy or sell a recruitment business over the next three months.

The survey also revealed that a massive 90% of respondents believe there will be an increase in M&A in the recruitment sector in the same period.

The top three reasons for buying or selling were:

• institutional investor interest and opportunities to pick up bargains
• sellers want to exit
• for smaller companies, lack of access to funding.

“There is a real interest in stepped-up M&A action in the market,” said Recruiter editor DeeDee Doke. “That could be because of several factors: the predictions for increased market consolidation, a bit of inertia and a desire by both buyer and seller for some market momentum as the recovery continues.”

Andrew Saul, M&A partner at Osborne Clarke, said: “We’ve been busy on major M&A transactions for several months now, with more going through now taking us to eight this year. Two have been in the £50m-£100m bracket, so there is evidence of real investor appetite.”

Saul went on to say: “There’s a view from the market that deals at decent profit multiples can get done by sellers with good niches or geographical footprints, with investments coming from private equity, international buyers and other management teams.

“Equally,” he added, “it’s a promising market for those looking to refocus their business - divesting themselves of a non-core team to another player in the market.”

Kevin Barrow, strategic sourcing partner at Osborne Clarke, noted: “Combine the perceived lack of funding for smaller players and the fact that corporates are increasingly sourcing their recruitment needs internationally, and you have a model that rewards entrepreneurs who are willing to sell to a major competitor and stick with the larger business for a further three to five years.”

The 49 participants in the survey included 37% chief executives, with non-executive directors and heads of division making up the next largest percentages. Chief financial officers and chief operations officers also took part. Of the participants, 82.6% earned more than half of their annual revenues from professional sectors.

The respondents represented companies ranging in staff numbers from one to 10 (19%), 11 to 50 (32%), 51 to 250 (32%) and 251+ (17%).