The number of recruitment agencies entering administration in the first three months of 2010 increased by  21% on the previous quarter, with 23 businesses failing.

A survey by Recruiterfound that at least 14 of the 23 were still trading in some form, often with the goodwill and assets of the company having been bought back by the original management.  

Steve Hyde, chief executive of 1801 group, told Recruiter that Inspired Selection had been bought back in a pre-pack arrangement after it went into administration. He said the company suffered because of the difficulties in the media and publishing sector, and because the parent company floated shortly before the downturn.

“It went into the pre-pack with no debt apart from to the bank, which has now become a shareholder. The management team owned 70% of the shares [in the original listed company] so we had the most to lose.

“Going into administration is never easy, but your obligation is to the staff and the company, and if it’s the right thing to do, you have to do it.”

The number of recruitment agencies with multi-million-pound turnovers increased on the previous quarter, with at least seven companies having annual turnovers in excess of 1m. Topping the list size-wise were First People Solutions (Holdings) and Hexagon at £52m and £35m respectively.

For further analysis and a full list of the recruitment agencies which went into administration, see today’s Recruiter magazine (14 April).