Recruitment sector M&A activity in 2021

6 Apr 2022

Business people meeting

Our report looks at UK merger and acquisition (M&A) activity across the recruitment sector during 2021. In a year that continued to be challenging for many businesses, our findings highlight some real positives for the sector.

Transaction volumes

92 transactions were identified involving UK recruitment companies during 2021. This represents an increase on the 87 deals completed in the 12 months to 31 December 2020, primarily driven by an uplift in economic optimism and pent-up demand following the initial shock on the economy from the Covid-19 pandemic.

Recruiters with healthcare specialism recovered well in 2021 following a decline in corporate M&A in 2020; whilst the IT, technology and digital area of the sector also reported strong growth in deal numbers.

The number of monthly completed transactions peaked in March 2021, driven by the anticipated, but ultimately not enacted UK capital gains tax (CGT) reform measures.

Listed company analysis

Share prices in the recruitment sector appreciated significantly over the past 12 months (circa 32.6%) and significantly outperformed the FTSE All Share Index.

This was largely due to an increase in employment mobility after a period of suppressed activity during the worst of the Covid-19 pandemic, along with UK government efforts to improve employment rates in the UK.

Average Enterprise Value (EV)/last twelve months (LTM) earnings before interest, taxes, depreciation, and amortization (EBITDA) multiples in the recruitment sector spiked in the first six months of 2021, significantly outperforming the wider UK market. Multiples subsequently dropped away in the last six months of 2021 as the recruitment sector boom began to cool. However, the average EV/LTM EBITDA multiple in December 2021 remained significantly above pre-pandemic levels.

Private equity involvement

The proportion of recruitment sector transactions with private equity involvement increased throughout 2021, as investors looked to utilise record levels of available funds.

Based on the deals identified, sector specialism was a key driver for M&A activity throughout 2021, particularly in the healthcare and IT, technology and digital areas.

Cross-border activities

In line with the wider UK M&A market, cross-border recruitment sector M&A activity involving UK companies peaked in the second half of 2021.

Download the full PDF report

Some of the recent recruitment transactions we have worked on

Our Corporate Finance Team have provided transaction services to many recruitment sector clients throughout 2021. You can read about two of our latest deals here, and here.

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

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