Preparing for sale

Most of the recruitment businesses in our survey (63%) say their appetite for a business sale has increased over the past 12 months – a sentiment that is broadly consistent across all sizes of firm.

This is perhaps not surprising, given that many firms were trading at an all-time high during 2022, and with owners looking to take advantage of buoyant market conditions to achieve an exit.

A swathe of acquisitions in the sector last year certainly demonstrated demand not only for trade sales but also lots of interest from private equity (PE) funds, with significant ‘dry powder’ to invest.

Those recruitment firm owners considering their exit options will no doubt be focusing on many of the issues highlighted in our survey in order to make their businesses as attractive as possible to potential buyers.

In addition to the strength of the management team, breadth of service offering will generally be an important factor in offering a mixed revenue stream to a prospective buyer, particularly a PE investor looking for a recurring income stream to service debt funding.

Firms that can carve out a reputation in a small but specialist area are also likely to be in demand with investors.

And recruitment agencies expanding successfully and proving their business models in overseas markets such as North America and Europe will help to bring a strong multiple on sale.

For further information on preparing for sale, see how to develop a business exit plan? at the Saffery website.