Executive summary

Bouncing back after the Covid-19 pandemic, 2022 was a relatively positive year for M&A in the recruitment sector as the global economy continued its recovery. In the face of difficult trading conditions for businesses, from high inflation and rising interest rates to a resulting cost-of-living crisis, the economic uncertainty that shaped the final half of 2022 didn’t slow down as we stepped into 2023. However, despite this wider instability, deal volumes had begun to increase by the end of 2022 and picked up pace in Q1 2023. Activity then reduced in Q2, but as we progressed through Q3 and into Q4, we saw a significant uplift in transactions, particularly in December.

Technology and healthcare remain key areas for M&A activity within the recruitment sector, with 24 and 13 transactions completed respectively. Although a similar number of transactions in these sectors completed last year (21 and 15 respectively), the proportion of total transactions this represented was higher in 2023 (here).

Overall transaction volumes in the first three quarters of the year were relatively flat (with the exception of 15 deals completing in March). This was followed by a significant decrease in the number of deals in October 2023, but an uptick in the final two months of 2023. A total of 96 deals completed during 2023 (compared to 106 in the previous year). As well as a decrease in the total number of deals for 2023, the sector also saw a decrease in value.

Despite a challenging year for recruitment overall, with continuing labour and skills shortages coupled with many businesses freezing recruitment due to wider economic instability, deal volumes have reverted back to levels seen before 2021; potentially showing a movement towards more stability instead of peaks and troughs as we begin the 2024 journey (here). Early signs for 2024 look positive from an M&A perspective with some high-profile transactions completed in January 2024 – however it’s too soon to tell if this momentum will continue through the rest of the year. Political uncertainties, both domestically with the looming UK general election and internationally, may contribute to a climate of hesitancy, impacting the decision-making process for potential deals.

As well as exploring trends in valuations and the number of transactions from the past year (here), our team of experts provide their insight on what this could mean for the sector moving forward (here) and how we can help you navigate the current market to make the right decisions for your business (here).

Niraj Patel

Partner and Head of Corporate Finance, London T: +44 (0)20 7841 4244 E: niraj.patel@saffery.com

Jamie Cassell

Partner and Head of Recruitment Group, London T: +44 (0)20 7841 3160

E: jamie.cassell@saffery.com