M&A activity in the recruitment sector – 2023

18 Mar 2024

merger and acquisition - recruitment 2023

Our report examines and analyses UK merger and acquisition (M&A) activity across the recruitment sector during 2023.

Despite a challenging year overall, with continuing labour and skills shortages coupled with many businesses freezing recruitment due to wider economic instability, deal volumes have reverted to levels last seen before 2021; potentially showing a movement towards more stability instead of peaks and troughs.

Transaction volumes

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.

Technology remains a key sector

IT, technology and digital continue to be buoyant areas for recruitment transactional activity, comprising 25% of all deals in the sector in 2023.

With the continued development of AI in 2023, increased activity is expected from specialist technology firms as more resource is dedicated to exploring AI in larger corporates. In turn, we would expect to see more M&A activity amongst these specialist IT recruitment firms, which are increasingly attractive to potential buyers.

Increase in private equity involvement

In 2023, private equity involvement in deals notably surged to 35.4%, a significant increase from the 21.7% recorded in 2022. Leveraged deals were on the decline given the continued escalation of interest rates, marked by five base rate rises in 2023, from 4% to 5.25% taking the base rate to the highest level since 2008. This rise in interest rates has diminished the attractiveness of debt financing, with the resulting pressures beginning to impact the broader economy.

Read our full report

For any queries on how we could help your business, please get in touch with Niraj Patel, Head of Corporate Finance, or Jamie Cassell, Head of our Recruitment Group.

Contact Us

Niraj Patel
Partner, London

Key experience

Niraj is head of the firm’s Corporate Finance Team and advises clients on transaction support and business advisory assignments.