2025 saw the UK recruitment industry decline in value by 3% to £25bn, the first reduction we've seen since the pandemic. With rising costs, uncertainty and an unfavourable economic climate, M&A activity also declined by 10% to 97 deals for the year. As we move forward in 2026, the feeling is one of stabilization and we expect to see more interest from private equity as they drive activity through buy and build strategies to increase scale and capability.
 

What's included in this year's report:

• An overview of the recruitment sector in 2025
• Economic and market drivers influencing the performance of the sector
• Key trends within the recruitment M&A market including analysis on buyers and sub-sectors
• Overseas M&A activity involving recruitment companies in the UK
• Analysis from our recent survey on sentiment within the sector

 

Explore insights from our experts:

• Rob Woodward from BDO’s Employment Tax team provides a detailed explanation on recent tax changes coming out of the November budget impacting the sector
• Andrea Bunbury, from BDO’s Share Plans & Incentives team, discusses the recent changes to Employee Ownership Trusts (EOTs) and explains what businesses considering this option now need to consider
• Catherine Wilks, who leads Data Analytics and AI for BDO shares her thoughts on how new technologies are shaping the sector

 

If you would like to discuss any of the content in this report, or are a recruitment business looking to speak to an expert, please do get in touch.

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Recruitment M&A Snapshot 2025

Whilst skill shortages and macro-economic uncertainty continue to persist, firms are turning to technology to revolutionise how they identify, attract and hire talent.

It is unsurprising that deal volumes have remained fairly static given market unrest, but acquirers are still finding ways to get deals done. Some key themes include a continued interest in bolt on acquisitions and a significant increase in venture capital into tech platforms/software.

What’s included in this snapshot:

• H1 deal volumes have remained fairly static
• The rise of AI and automation
• UK continues to attract investment from a diverse set of overseas buyers but is still dominated by UK trade acquirers
• H1 has seen an increase in unemployment levels from 4.6% to 4.7%
• Notable deals in the sector

 

Download the snapshot for further insights.

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If you would like to discuss any of the content in this snapshot or are a recruitment business looking to speak to an expert, please do get in touch.