Of the top 1,000 UK recruiters, 136 have left themselves open to becoming a bargain acquisition, according to new research from financial research company Plimsoll.

 
David Pattison, senior analyst and author of the latest Plimsoll Analysis, says there are five factors that lie at the heart of this:
 
1.      “The recession has forced 242 companies in the market into a loss-making position. As profitability has fallen so have company valuations. In fact one company has seen its value fall to just 40% of its previous high. For a company looking for a cheap and easy way to ‘buy in’ some extra marketshare there are some bargains to be had.
 
2.      “Despite the lock down in the financial sector corporate debts are still rising; 136 companies in the UK recruitment agencies industry now have debt levels rise which I would class as unmanageable. Some great businesses are available for those able to finance a bail out.
 
3.      We are seeing an ageing set of owners in the market with 303 individuals working beyond retirement age. How many of these older owners have the appetite to rebuild their businesses battered by the last two years? Of course some will still have the stomach for it but for many a potential sale must be a serious consideration.
 
4.      “Those companies that didn’t make quick, targeted cuts in the face of falling demand are no longer competitive in the current market. 478 such companies are now well behind the curve and a merger or takeover could be the best way to recoup the economies of scale quickly. New owners would be looking to trim the excess quickly and slashing jobs seem the most obvious place to start.
 
5.      “I was shocked at the level of cash in the market currently. I identified 401 companies that I would class as ‘cash rich’ that have the facilities to finance the right deal at the right price. For any owner looking to sell their business, these are the guys they should be courting.”
 

Pattison adds: “It is clear that the recession has caused a sea change in the recruitment industry and for companies with cash to spend, there is a pool of targets to choose from. With the market starting to recover its better to spend some of that cash on a discount acquisition than have it sat in the bank.”

                                           
Recruiterreaders are entitled to a £50 discount of this new special edition of the Plimsoll Industry Analysis – Recruitment Agencies. Call 01642 626400 for further details and quote reference PR/SV30.