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Trade acquirers returned to the recruitment market in the first half of 2024, making up 75% of deals
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Nearly one in five deals involved overseas acquirers
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The education sector was a particularly active area for M&A activity during the first six months of 2024, comprising 11% of the deals.
The UK recruitment sector has seen a shift in buyer appetite in the first six months of the year, as more strategic trade buyers have come back into the market.
Between January and June 2024, there was a ‘sharp uptick’ in transactions involving trade acquirers – both in the UK and overseas. This compares to a ‘sustained period’ of private equity investment across the market in recent years. In the first half of 2024, 75% of deals were completed by trade acquirers, as buyers seek revenue synergies, cost savings, access to new territories, and broader sector capabilities.
The annual BDO Recruitment M&A H1 2024 report shows that overseas investors remain active in the market, demonstrating the attractiveness of UK recruitment assets, with nearly one in five deals involving international interest – the majority of which originated in the US. UK recruitment businesses also continue to look overseas for strategic acquisitions, showing confidence and a willingness to expand internationally in a bid to enhance longer-term shareholder value and growth.
James Fieldhouse, M&A partner at BDO LLP, said: “During a sustained period characterised by private equity investment over recent years, we’ve seen a notable shift during the first half of 2024 towards strategic trade buyers re-entering the acquisition trail.
“Although caution should be taken when trying to draw trends based on activity during a relatively short period, the sharp uptick on previous quarters is stark and is potentially indicative of current market sentiment, activity and a direction of travel. In addition, this confidence amongst trade acquirers appears to extend further afield beyond the UK, with deal hungry deal makers seeking growth overseas in far flung territories, including New Zealand.”
He added: “Importantly, this investment outside the UK has seemingly not come at the expense of inward overseas investment, with UK recruitment companies still attracting attention from our global counterparts, including the US, India and Hong Kong.”
According to the report, deal activity during the first half of the year was evenly spread across sub-sectors, including executive search, healthcare, engineering and industrial. However, as with previous quarters, investment in recruitment software and technology platforms continues to be a consistent fixture in the deals market. The education sector was also a particularly active area for M&A activity during the first six months of 2024, comprising 11% of the deals.
The report also highlighted a number of standout deals in the first half of the year. These included Morson Group’s - the UK based technical engineering recruitment consultancy – acquisition of Interquest Group (UK) Ltd, the local provider of recruitment services for the IT sector in January 2024. During the period we’ve also seen Morson take external investment from Onex Corp, the Canada based private equity and asset management company.
Fieldhouse concluded: “Looking ahead, the future prospects of recruitment agencies and the wider UK economy remains to be seen, having successfully navigated several seismic economic events in recent years. Suffice to say, there remains confidence across the industry that the sector will continue to be resilient, despite the changing political and economic landscape.”