M&A Market Review: Recruitment sector

29 July 2020

2020 Mid-year Recruitment Market snapshot

BDO’s mid-year market snapshot monitors deal activity in the recruitment market in the first half of 2020 and figures to date show a tale of two halves.

The first quarter of 2020 showed a promising start, with 33 deals completed globally - a similar level to 2019. However, the effects of COVID-19 hit, and the BDO Recruitment FTSE Index fell by over 40% at the end of March 2020. This was also reflected in deal volumes as the number of UK deals in 2020 (H1) halved compared to 2019 (H1) levels. Despite these reduced volumes we’ve seen recent historic trends continue including an uptick in private equity activity in the sector, as well as continued interest and demand in tech-enabled recruitment solutions.

The health crisis has tested the flexibility and responsiveness of the recruitment industry, and whatever the shape of the economic recovery, we expect the sector to rise to the current challenges being faced.

Read our mid-year snapshot

2020 Annual Recruitment Market review

BDO's latest Mergers & Acquisitions review of the recruitment sector looks at deal activity and industry trends in the recruitment market in 2019. The latest report shows the sector has remained resilient and attractive to investors through 2019 despite the economic uncertainty.

The recruitment market grew by 5.5% in 2019, to £13.9bn – a gradual deceleration over the last couple of years, but beating its 2.8% forecast growth.

Global deals have increased from 2018 to 2019 by 17%. The UK has remained an attractive market for investment, but with UK deal level falling from its six year high in 2018 it has been overtaken by the US which ranked No. 1 for M&A activity. With a strong focus on technology investment in the sector, transactions related to recruitment software and platforms accounted for 23% of all deals.

In the UK, unemployment rates reached a 44 year low in March 2019. However, it seemed over the summer months that as the final Brexit date approached, business confidence was muted and unemployment began to rise. The recruitment sector remains closely aligned to the direction of travel of the wider economy and so greater certainty post-election has seen a return to higher valuations and is anticipated to spark activity.

What’s in store for recruitment firms in 2020?

In our report alongside a full review of M&A activity we also discuss:

  • The war for talent in a post-Brexit world and how firms can plan for this
  • The wide variety of remuneration and recognition schemes available for recruitment firms to consider for their own employees
  • The extension of IR35 to the private sector and its impact
  • Insights from three industry operators: Vector Resourcing, Encore Personnel and Hydrogen Group Plc.


If you would like to discuss any of the content in this report or any other business related issue, please do get in touch.

Previous M&A annual reports and market snapshots for the recruitment sector: