Report:

2022 Annual Recruitment Market Review

16 February 2022

BDO's latest Mergers & Acquisitions review of the recruitment sector looks at deal activity and industry trends in the recruitment market in 2021. The latest report shows the recruitment sector has experienced a boom in deal activity in 2021, against a challenging backdrop of remote working, the full impact of Brexit, unwinding of the furlough scheme and the Great Resignation.

In our report, alongside a full review of 2021 global and UK deal activity we cover:

  • Current thinking about human capital – our regular survey of c-suite management of medium-sixed UK businesses reveals insights around businesses’ relationships with their employees, and concerns around recruitment
  • Will your furlough claims come back to haunt you? HMRC are cracking down on fraudulent or error-based claims and we outline how you can limit your risk
  • Attracting and motivating the workforce – offering the right mix of pay, rewards and benefits to attract the right candidates and to maintain a motivated workforce has become more complicated. We explore the science behind how pay and reward affect employee outcomes
  • The ESG agenda – why is an ESG strategy important and what does each of the E, S and G elements mean for the recruitment industry?

What are the recruitment mergers and acquisitions (M&A) activity headlines?

  • Overall deal activity in the UK increased by 42% in 2021 compared with 2020 levels. The recruitment market followed this trend with 40 deals, up from 21 in 2021 and surpassing a previous 10 year high of 36 deals in 2018
  • In a world which has quickly adapted to an increasingly online and remote working environment, unsurprisingly recruitment platforms/ software have continued to attract investment as well as IT and healthcare. There has also been a notable uptick in activity amongst recruitment agencies in traditional industries such as engineering, construction and industrial
  • Selling to a trade acquirer or bringing on board a Private Equity investor continue to be the most common forms of divestment for recruitment owners
  • It’s also pleasing to report that despite the adversity and potential global barriers caused by the global pandemic and Brexit, the UK remains a country of interest for overseas acquirers and investors.

What is in the immediate future for the recruitment industry?

2021 exceeded all expectations and we observe a general sense of optimism from recruitment agency owners and management teams that growth looks set to continue. With the majority of sectors in the UK now recovering and/or showing signs of further growth, we hope the M&A environment will continue to thrive in 2022. However a cautious approach is wise, as we note some external events and factors which might come into play to de-rail this activity in future months - including recent downgrading of recruitment stocks and IMF reducing UK growth prospects.

To get the full picture of what is happening in the recruitment market and a full analysis of deal activity:

READ OUR FULL 2022 REPORT

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: