Recruitment businesses remain attractive to investors, but UK deal numbers are lower in 2019 following economic uncertainty, according to the latest report from national accountancy and business advisory firm BDO LLP.

The key findings from the report were;

  • The global recruitment market grew at an impressive compound annual rate of 7.4% over the five years through 2020 to £13.9bn.
  • In 2019 the market grew by 5.5%; a gradual deceleration over the last couple of years, but against a growth forecast of 2.8% for the year.
  • The number of global M&A deals has increased by 17% with US deals rising from 17 in 2018 to 41 in 2019, overtaking the UK to rank No. 1 for M&A activity.
  • The number of UK transactions declined from 2018’s six-year high of 32 to 25 in 2019.
  • Overseas investors account for 16% of UK deals last year compared to 25% in the previous 12 months

The report revealed that technology-related deals accounted for 23% of all transactions.

The report also highlighted the market dynamics, which have led to a slight slowdown in sector deal activity in the UK.  Unemployment rates reached a 44-year low in March 2019 but began to rise again against the UK’s political and economic backdrop of a prolonged period of uncertainty in 2019, with moving Brexit deadlines.

In 2020, the UK industry revenue is expected to grow marginally at 4.4% and at a compound rate of 1.1% in the next five years with the main growth drivers including people seeking to switch roles to advance their careers and an increase in demand from the public sector.

“The recruitment sector has remained resilient and attractive to investors despite economic uncertainty. There’s a real appetite for recruitment businesses innovating with technology or providing specialist expertise and serving a niche part of the market. Considering the fact that globally the number of deals in the sector rose in 2019, I expect that a return to more certainty in 2020 should spark more UK deal activity.   We’d also expect to see a renewed interest in the sector from private equity investors with high volumes of dry powder looking for quality assets.”

(James Fieldhouse M&A Managing Director at BDO LLP)


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