2021 Mid-year Recruitment Market snapshot

05 August 2021

Our mid-year market snapshot monitors deal activity and market conditions in the recruitment industry. Figures for the first half of 2021 show renewed optimism in the recruitment market.

At the beginning of 2021, sentiment amongst recruitment leaders showed that the combination of Brexit and the health crisis was presenting complex trading conditions. Whilst these challenges have evolved, there is clear evidence that the sector is bouncing back: 

  • M&A activity has started to gather some real momentum, with 20 UK sector deals taking place in H1 2021, compared to 21 in the whole of last year
  • The abundance of capital available from private equity and other investors is continuing to drive deal activity within the recruitment sector, with a draw to those companies with excellent management teams and operations in markets and sectors which are experiencing growth in the current economic climate
  • In terms of trends, we continue to see a movement to invest within recruitment technology assets and more interestingly, a rise of M&A activity within the engineering/construction/industrial sectors.

As we move into the second half of 2021, recruitment leadership teams are responding to limitations in the supply of overseas candidates, wage inflations resulting from talent wars and a need to place emphasis on holding onto their own talent, as a competitive job market threatens the sectors growth opportunity. Nevertheless, we have seen the industry show flexibility and responsiveness in response to the health crisis and we expect to see the sector continuing to evolve and rise up to the current challenges being faced.


2021 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 2020. The latest report shows a mixed picture according to the make-up and sector specialism of recruitment firms, and sentiment amongst recruitment leaders is that the combination of Brexit and the health crisis is presenting complex trading conditions.

What are the headlines? 

Despite the impact of the global pandemic, transaction volume in the UK recruitment market ended the year with just four fewer deals than 2019, and with significant momentum heading into 2021. Globally, deal volumes were down 20% compared to 2019.

Following growth at an impressive 7.4% over the previous five years, benefitting from an expanding economy and falling unemployment, the COVID-19 outbreak is expected to have resulted in a sharp drop in annual revenue for the sector of 35% in 2020, with demand significantly affected in areas such as hospitality and tourism. Industry revenues are not expected to immediately bounce back to pre-COVID-19 levels, but to gradually recover. 

Deal activity

Against this background, UK deal activity has been a real rollercoaster ride. Deal volumes tailed off from a promising start in January, as the seriousness of the COVID-19 crisis became apparent. The uncertainty put many deals on hold across all sectors (not just recruitment) while businesses waited for more clarity on the impact and the extent of government support. 

There were a number of resilient sectors which have seen strong levels of deal activity. Global healthcare recruitment deals are up by 50% for example. And similar to the trend we have seen in recent years, recruitment platforms and software based businesses have proved popular for acquirers.

Private equity investment has again played an active role in UK recruitment deals this year, accounting for a third of all deals, further demonstrating the growing importance of private equity within the overall transaction environment. 

What is in the immediate future for the recruitment industry?

The next 12 months is a particularly tricky period to predict given the ongoing uncertainty caused by the global pandemic, and the effects of the most recent lockdown in early 2021. This is in addition to Brexit, where the impact on the recruitment market and the wider economy remain to be seen. 

Following the surge in deals towards the end of 2020 we would hope for increased deal activity during 2021, and the roll-out of a vaccine certainly gives us reason to be hopeful. The anticipated potential changes to rules around UK capital gains tax have also been an influence driving recent deal volumes, although this has to be balanced with the switching off of Government support which is likely to impact adversely upon unemployment. 

In our report, alongside a full review of 2020 global and UK deal activity we also cover:

  • An industry overview and investment sentiment
  • Do recruiters work best in the office?
  • Tech in recruitment and the availability of R&D tax credits
  • The common themes drawn from our discussions with businesses leaders across sectors and geographies.


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: