The economic downturn will lead to a series of takeovers and sell offs across the recruitment industry, according to a new report. 

The report, by Plimsoll Publishing, has found that the economic situation is forcing smaller companies to consider selling to their larger rivals, as larger players look to buy their smaller rivals to diversify and develop their businesses.

David Pattison, senior analyst at Plimsoll, said: “It has a great deal to do with necessity. Many of the larger players in the market, despite the downturn, are desperate to find new ways to develop their business, but with the current climate, costs are being cut and business development is being slashed. So they need options to help them protect their futures and tap into exiting
revenue and profit streams.”

Acquiring key niche players will provide a quick route to increasing sales, for relevantly low cost, and a foothold in the emerging sectors of the market, added Pattison.

The report found that many owners of small niche recruiters are keen to sell, despite sales increases of over 36% a year. Several factors are at play here: a combination of their businesses now reaching a critical point in their development, twinned with the tightening of credit and a reluctance of the money markets to finance the next phase of development.

Selling niche recruiters can stabilise and protect the business and accelerates the development of the company due to access to extra resources, added the report.