This is according to professional services organisation BDO’s latest annual review of M&A in the recruitment sector. 

The number was down from the 40 transactions occurring in what BDO called the “dizzy heights” of 2021, but still near the previous decade’s high of 36 in 2018, the report said.

Released today [14 February], the review flags up the rise in the number of transactions involving multi-sector, or generalist, agencies, which BDO said was likely to have occurred in part by the companies’ ability “to deliver sustainable earnings against a backdrop of economic and political instability”.

Another trend highlighted in the report is the “notable rise” of the ‘Recruit Train Deploy’ model within the recruitment industry. Those companies using the RTD model hire and employ staff, deliver a few months of intensive training in skilled careers and then deploy them into a client business where they receive supervision and support. The model offers benefits for all parties.

Populations targeted for RTD opportunities include ex-forces personnel, returners to work, recent graduates, experienced hires who want to pivot their careers and more widely diverse individuals. In the report, BDO showcases firms that have developed variations of the RTD model for entrants into career fields such as software development, robotic process automation, cloud solutions, data engineering and AI. 

Other key points in the report:

• 28% of M&A deals involving a UK target were acquisitions by international bidders, compared to 8% in 2021
• Recruitment platform/software M&A amounted to nearly a third of total transactions in 2022, with 11 deals, of which 37% had US bidders
• 39% of deals had a private equity bidder, up from 25% in 2021
• Seven overseas buyers of UK businesses in the recruitment sector during 2022 included the US, China, Italy, Singapore and Switzerland
• Chinese HR business Beijing Career International Co acquired a 10% stake in UK recruiter Investigo with consideration paid about £9.9m
• Average enterprise value (EV) to earnings before interest, tax, depreciation and amortisation (EBITDA) multiple dropped significantly for tracked recruitment companies during the year, by nearly half from the start of the period, to about 6.5x. 

In summarising the outlook for the recruitment sector in 2023, James Fieldhouse, M&A managing director, said: “We’re looking forward with cautious optimism to another active transactional year in the recruitment sector.”

To access the full report, visit here.

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