The accountancy and business advisory firm’s latest mergers & acquisitions review of the recruitment sector reveals that the sector has experienced a boom in deal activity in 2021, against a challenging backdrop of remote working, the full impact of Brexit, unwinding of the furlough scheme and the Great Resignation.

According to the ‘2022 Annual Recruitment Market Review’, at the start of 2022, UK deal activity in the recruitment market had reached a 10-year high and there was a confident sentiment among recruitment leaders that growth would continue. Six months on and while there have been many factors at play, deal levels have continued apace to match levels only just below the same period of H1 in 2021.

This has been driven by overseas investors sourcing fast-growing UK recruitment companies with strong management teams and a continued interest from the private equity sector to back high quality and entrepreneurial leaders of recruitment companies who have a vision for further growth.

BDO analysis states: “Factors at play include the slowing but continued rise in job vacancies, while latest figures show the unemployment rate has fallen again since the start of the year, leading to a shortage of available labour and a heated jobs market. As such, many business owners are keen to either seek investment and grow, or alternatively de-risk, on the back of a positive trading performance. 

“We have also noted a rise in interest in generalist recruitment businesses; having a diverse mix of sectors in a disrupted market has proved to be a successful strategy in maintaining a sustainable level of income.”

With the macro-economic shock from the Russia/Ukraine conflict, the report reveals, “alongside other pressures in the economy coming from high levels of inflation, a cost of living surge and, believe it or not, yet another Tory leadership contest, making predictions in this ever-changing marketplace is tough, but we are confident that staffing and recruitment companies will continue to play a vital role within a UK economy grappling with fragile consumer confidence”.

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