Speed is of the essence when doing merger and acquisition (M&A) deals, a seminar for recruiters in London has heard.

The seminar, 'The Credit Squeeze: How can Recruiters Preserve Value?', heard that M&A activity in the sector had stalled as the availability of finance had declined as a result of the economic downturn.

Kevin Barrow, a partner at solicitors Blake Lapthorn Tarlo Lyons, told the audience that in circumstances when companies found themselves in difficulties, sellers needed to move fast. "If a seller waits too long when the company is in difficulty it will lose credibility with its lenders," he said. It may then resort to "too desperate-looking sale propositions", including adverts or unfocused mailshots.

Often this meant there was no deal, said Barrow, and this led to financial difficulty as lenders withdraw facilities. This fed market rumours, which could lead to competitors poaching clients and consultants. The overall effect was that the value of the company could be severely dissipated.

"When things get difficult, value in the recruitment sector can dissipate faster than in almost any other kind of business," Barrow added.

There were a number of ways recruiters could preserve the value of their company, said Barrow. These were:

• move early
• keep lenders onside, and go to market with a sensible sale/lending proposition
• talk to prospective buyers with a strict non-disclosure agreement
• keep key staff on board.