'Human Capital Exit Timing Considerations', released in May, points out that capital gains tax (CGT) changes are “firmly on the agenda” for the government’s Autumn Budget, making the next few months ripe for business owners in the human capital sector, such as recruitment, to capitalise on favourable market valuations, consolidation, hiring and demand trends.

Key points in the report are:  

• The HC sector has seen a significant recovery in valuations since the pandemic first began, with valuation multiples doubling in the past 12 months. Valuations have also been buoyed by interest from private equity companies who hold what Gambit called “a record £1.7tn of dry powder” and are looking for “high-quality and opportunistic deals”.  
• Buoyant M&A market activity is also being facilitated by a supportive debt market, which is deploying capital at record low interest rates.  
• As the service portfolios of recruiters, talent platforms and online job advertising firms increasingly overlap, competitive intensity is growing and HC companies will look to broaden the channels through which they operate, driving a wave of consolidation.

Said Simon Marsden, director, HC at Gambit: “HC business owners considering an exit are in the driving seat and have six months to ensure the value in their shareholding is optimised before any changes to CGT are announced in the autumn.”

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