Last week IT recruiter Spring Group confirmed it had received a proposal about a potential cash offer for the company. Along with the recent acquisitions of Napier Scott and Whitehead Mann, it suggests that after a relatively quiet period, M&A (mergers and acquisitions) activity could be about to take off.

John Bissell, senior partner in LBA, which specialises in the valuation and brokering sales of recruitment firms, contends that from May, an increasing number of buyers have returned to the market to look for quality businesses.

“I am working on more deals than at any other time since 1998,” Bissell told Recruiter. “Buyers are seeing the recession as an opportunity to grow and will pay sensible prices for the right businesses. Very good businesses are selling at prices close to those achievable before the onset of the credit crunch.”

Philip Albright, director and co-founder of the1, an M&A business for the human capital sector, told Recruiter that buyers did seem to be looking for higher value companies. “There’s definitely been more interest from buyers, mainly as a result of the sentiment that things have stopped getting worse,” he said.

“Sellers are demanding higher prices in sectors which have been largely unaffected, such as public sector recruiters and those in the energy sector.”

In its recruitment sector M&A summer/autumn update, Catalyst Corporate Finance suggests that while there are traders with cash around they are “ultimately sceptical” about why potential ‘target companies’ are coming to market unless they have serious underlying financial problems.

Catalyst predicts that, based on previous recessions, M&A activity will begin to pick up from early 2010. However, that is not to say the market will be dead until then. As Tim Evans, a director at Catalyst Corporate Finance, said about the proposal for Spring. “It a reminder that there are good deals to be done with recruitment businesses that demonstrate decent fundamentals such an international footprint, strong contract revenues and a capable management team.

Buying these businesses now and owning them through an economic upturn has always historically generated attractive returns for owners and investors.”