According to the 2025 ‘Recruitment M&A Annual Report’ from BDO, the volume of purchases and sales of recruitment businesses in the UK rose by 49% in 2024 compared to the previous year in spite of the underlying economic doldrums, with a total of 104 deals achieved during the year.

Most deals were trade-led, the report said, but private equity investors were still “very much present”, investing in 30 deals in 2024, compared to 24 deals in 2023.

Going forward, James Fieldhouse, BDO’s M&A partner, predicted that more M&A activity will follow in recruitment this year, building on the 2024 movements: “The persistent low-growth environment in the UK continues to provide a stimulus for agency directors to seek new opportunities, whether this be overseas – as evident within the recent M&A activity – or identifying new sectors and/or markets to refocus efforts.” 

The report identifies serial investors in the recruitment sector as Recruitment Entrepreneur and Bluestones Investment Group, with a combined 8% of the total deal activity in 2024. With particular participation from the US, overseas investment into the UK recruitment sector was up 78% in 2024 compared to 2023, increasing to 16 deals from the previous nine. 

In terms of sectors, M&A activity for executive search companies was highlighted for its “exponential” growth in 2024, with over three times the number of deals in 2024 than in 2023. Engineering recruitment was also attractive to dealmakers in 2024, including both trade and management buy-outs (MBOs), with market demand high for ‘green engineering’ roles especially, the report highlights.

However, the economic flatlining last year also caused the recruitment industry to experience significant losses, in terms of business insolvencies. In 2024, an average of 43 recruitment businesses declared insolvency per month, the report said. To prevent insolvency, BDO’s Glyn Maisey, managing director of the company’s Special Situations M&A, urges management teams to remain “laser-focused on liquidity, not just profitability” and implementing cashflow forecasting to stay in financial health.

A section devoted to trends in talent acquisition companies and recruitment agencies notes the current “somewhat complex” sentiment. “On one hand, we hear about redundancies and job cuts in well-known organisations,” writes Sam Seehra, director in BDO’s London people advisory service. “On the other, there are constant reports of skill shortages and lack of productivity.

“Both seem to be true, with job growth in areas like AI and [environmental, social and governance] ESG,” Seehra says.

Seehra also points out the evolving needs that clients have of recruiters, such as “partners who can help solve various talent issues. For example, if they face talent shortages, a partner who can assist with reskilling strategies will be more helpful than an agency continually looking for a needle in a haystack”. 

Given the increasing focus on building long-term relationships and deliver deeper services, recruiters also must consider how they reward, recognise and promote talent in changing times, Seehra warns: “The old methods of reward and recognition are likely outdated [because of]… a transactional mindset. Recruitment companies need to re-think how they incentivise and reward the behaviours their clients want from their staff.”

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