And pressure on prices justified by the economic situation has caused hesitation from sellers.

Although prices have dropped, the number of deals taking place has picked up.

John Bissell, senior partner at LBA, who specialises in recruitment agency acquisitions, told Recruiter activity had been “picking up” over the last two months. “I have a lot of sellers now, more than I did this time last year,” he said.

Marketplace optimism is driving buyer confidence. Jack Sheldon, managing director of management consultancy Adison International, which advises recruiters on sales and acquisitions, added: “There’s a little more optimism in the market. Most owners can see the time for coming out of recession is six months off.”

Nick Stevens, director at multi-sector recruiter Eximius IT, told Recruiter he felt the current marketplace provides
the ideal opportunity for specialists to build business through acquisition, by targeting sectors related to the existing business.

However, the multiplier, which reflects the number of times pre-tax profits buyers are prepared to pay, has dropped even where businesses have maintained or upped profits.

Bissell said: “You will not get the same multiplier for a recruitment business [as you did before the downturn], even in a buoyant sector like healthcare.”

Sheldon said he had been approached by several buyers who were struggling to identify suitable companies in the market.

There is also a rash of distressed businesses looking to sell because of financial woes, Bissell said.