The UK recruitment industry remains attractive to investors, despite the economic uncertainty surrounding Brexit, according to the latest M&A Recruitment Report from accountancy and business advisory firm, BDO.
The UK recruitment industry ranked number one globally in 2018 for number of transactions (32), up by more than 50% from the previous year and overtaking the US for deal volume.
With a total revenue of £12.3bn, the industry continued to grow throughout the twelve months to December, although at a much slower rate than levels seen in the preceding five years.
Given the turmoil around Brexit, it’s positive to note that the UK saw sustained inward investment throughout 2018, with 25% of transactions involving an overseas buyer (an increase from 23% in 2017), illustrating continued growth in demand for UK recruitment assets.
Investment in the UK has remained attractive due to low unemployment levels and skill shortages in positions that need filling, while the weakening of the pound made UK assets attractive to global investors seeking undervalued opportunities.
Specialist providers in the construction and engineering sectors in particular saw notable uptake, demonstrating the continued importance of traditional industries to both the UK and global economy.
Private equity has continued to view the recruitment sector favourably - deal volumes have returned to less impressive 2016 levels, but appetite remains for assets from a ‘buy and build’ approach and those with a strong management team and clear growth plans.
The rise of alternative forms of lending has also been a notable recent trend; the use of unitranche debt has been particularly evident, for example.
James Fieldhouse, M&A Director at BDO LLP, said: “The continued growth of the recruitment industry and sustained investor interest is very positive and will no doubt give recruitment businesses confidence in their prospects for the year ahead, particularly given the pervading uncertainty caused by Brexit.”
He continued: “There are several key factors that we expect will further shape the recruitment industry during 2019 and beyond; the first, of course, being Brexit. The impact on business confidence has contributed to the delaying of recruitment plans and re-evaluation of hiring strategies - to put it into perspective, 96% of HR professionals and recruiters say that Brexit has impacted their hiring plans.
“Technology will also continue to play an important role in the coming years, the trend toward digitalisation showing no signs of slowing. Recruiters are increasingly using tech to save time and pursue more targeted leads - for example, 75% have used AI and ‘chatbots’ to drive efficiencies. It will be central to the development of the industry, with M&A interest in online portal and recruitment software expected to continue, mirroring the 11% increase in deals during 2018 - particularly domestically where software can be easily integrated.”
"The continued growth of the recruitment industry and sustained investor interest is very positive and will no doubt give recruitment businesses confidence in their prospects for the year ahead."
DISCLAIMER: The statements, opinions, views and advice expressed in this article are those of the author/organisation and not of ENTIRELY. This article should represent information correct at the time of publication however whilst every care has been taken to present up-to-date and accurate information, we cannot guarantee that inaccuracies will not occur. ENTIRELY will not be held responsible for any claim, loss, damage or inconvenience caused as a result of any information within this article or any information accessed through this site. The content of any organisations websites which you link to from ENTIRELY are entirely out of the control of ENTIRELY, and you proceed at your own risk. These links are provided purely for your convenience and do not imply any endorsement of or association with any products, services, content, information or materials offered by or accessible to you at the organisations site.