Recruiters in the oil & gas sector face a period of consolidation as smaller companies are bought up by larger competitors, according to staffing industry merger & acquisition (M&A) experts.

Daniel Walters, project manager at Optima Corporate Finance, told Recruiter that four oil & gas recruiters in the £3m-£6m valuation bracket had come onto the market in the past four or five weeks. “It is unusual to get the same sort of businesses popping up at the same time,” said Walters.

He added the high price of oil had created “a perfect storm” of more drilling activity, leading to more recruitment. “There is going to be a significant amount of work available, and some of the bigger staffing companies will be looking to acquire contracts, in areas where they are not strong to increase marketshare,” he said.

Tim Evans, managing director of Boxington Corporate Finance, said that current high oil prices were just one of the factors behind the predicted consolidation. “More important drivers are the continuing internationalisation of energy markets and the severe shortages in the higher skill sets, both of which are longer-term fundamentals,” said Evans.

He added that as well as the sub-£10m businesses in the market, there are a number of £10m-50m UK companies, which are yet to come to market.

He said it was not only other recruiters who are interested in acquiring oil & gas recruiters. “A number of oil & gas project service providers are open to doing recruitment company acquisitions to solve their skills shortages,” said Evans.

However, Paul Amani, MD of oil & gas recruiter Petrolic Consultants, disagreed that the sector was set for consolidation. Amani told Recruiter: “I would say that the niche agencies are able to offer a better service, given their knowledge and experience, and the big oil companies will continue to work with them regardless of size.”

Ian Langley, executive chairman of private equity backed oil & gas recruiter Air Energi, said that heightened interest in oil & gas recruiters represented “a return to normality”. “There has been a dearth of activity in the sector for the past two to three years with the private equity market not really trusting that the market has recovered,” said Langley.

In February, Business Sale Report reported that oil & gas recruiter NES might be put up for sale for an estimated £150m. NES could not be reached for comment.