The number of recruitment agencies going into administration has decreased for the last six consecutive quarters and in Q3 2010 only nine went through the process, according to analysis by Recruiter.

Of the nine businesses that were put into the hands of administrators during the last three months at least six are still trading in one form or another. Kim Rayment, a partner at accountancy firm BDO, told Recruiter the number of companies wanting to buy distressed recruitment agencies has increased and that in most cases these businesses were sold as on-going concerns. 

Andy Hogarth, chairman and chief executive at industrial recruiter Staffline, told Recruiter the number of businesses approaching Staffline because they are looking for a buyer had increased three fold on pre-recessionary levels.

“This year we have had at least 30 different approaches about acquisitions. We bought two businesses in May, one of which was from the administrator, and we have been looking at a lot more businesses since then,” he said, adding that part of this increase was due to proactive searching by his team.

Directors who worry that their recruitment businesses may be becoming distressed should seek help at the earliest possible opportunity, according to specialists in the field of corporate recovery.

Simon Plant, partner at corporate recovery and turnaround specialists SFP Group, told Recruiter: “Companies should seek help at the earliest opportunity, whenever they detect a consistent, downward trend. The difficulty is that directors are often too close to the business, and find it a greater challenge to make brutal decisions. Involving an insolvency practitioner earlier, rather than later, however, can save the business.

For a complete list of the companies that went into administration in Q3 2010 and further analysis of the problems causing businesses to become distressed, see 13 October edition of Recruiter, out today.