One in six recruitment agency businesses could change ownership as a result of the current economic climate, claims a new study by leading financial analysts Plimsoll.

With a surprising number of ‘cash-rich’ competitors waiting in the wings, the market could be set for a prolonged period of consolidation.

David Pattison, author of the new ‘Plimsoll Industry Analysis – Recruitment Agencies’, said that, in the current climate, “there are simply too many companies chasing too little market. With many directors eyeing the exit doors and highly leveraged buyouts consigned to history for the time being, it really is a buyer’s market out there for cash-rich companies”.

The Plimsoll Industry Analysis identified 214 companies that have “a sizeable cash reserve sat on their balance sheets that, due to record low interest rates, is generating nothing. One company has a £49m cash pot. These companies are now in the position to buy up large chunks of market share at rock bottom prices and make that money work for them. They must be like kids in a sweet shop at the moment — all those distressed competitors available at a fraction of their true value”.

The agency market is still regarded as one of the UK’s most fragmented sectors, Pattison went on to say. In the report 892 companies with a turnover of over £1m were analysed and 158 were identified that, in Pattison’s words, were “primed to be taken over. Buying one of these businesses represents a massive opportunity for someone to enhance their share of the market. Either way, the market is set for a wave of takeovers in the next months”.

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