Conversion with David Head on the buzz in M&A right now.
David runs Recruitment Mergers & Acquisitions Limited, using his extensive network to help Founders and leadership teams with M&A and exit strategies.
There’s a lot going on in Mergers & Acquisitions (M&A), and here are the highlights from our discussion:
What’s catching your eye in the recruitment industry right now?
“It’s holding up a lot better than expected.
Recent data from my own tracking of performance of the UK’s largest 600 recruitment companies, covering all sectors, shows that, despite obvious economic and political challenges, their collective decrease in turnover is just 3% between 2023 and 2024.
That doesn’t mean everything’s rosy – the same companies have reported that net fee income (NFI) is down by 15% and gross profit is down by on average 35%, indicating that many are working hard just to maintain market share but are not currently growing profits. That’s the challenge in the short term, however, as soon as those numbers begin to rise, and they will, that creates a great market for M&A.”
What’s the M&A landscape looking like?
“It remains busy and there are a number of areas in demand from acquirers which stand out:
The first is deep specialisation, and extremely high service levels that feed it.
One example is the recent sale of an agency with a founder determined to carve a unique niche in one focused sector. So it was actually a niche within a niche, and this focus remained central to everything that business stood for, even when badgered by their top salespeople to diversify.That paid off with a fantastic double digit multiple of EBIT when acquired by a business within that sector, whose motivation was to increase their existing recruitment offering.
The second is geographical / regional.
Motivation for this could be strategic, to expand into new territories as part of a wider plan, or client-led. For example, companies with gaps in locations, and clients asking them to open in those regions. Acquisition can be a lot faster than creating these from scratch, especially if it's a well-run operation. You can also add in skill sectors to these types of deals.The third is in value adds to current services.
Again, this is where established businesses that already have great services, are looking to add to, and broaden, those services, and charge their clients extra for them. For example, it could be training or technology-led.The fourth is distressed.
Not where you want to be and sadly the number of recruitment companies that find themselves between a rock and a hard place has risen dramatically in the first half of 2025. There are still options open to you, the key is to act quickly before it’s too late.”
What advice would you give founders and leaders looking to exit?
“Invest in your exit over the next three years, because this will have a massive impact on your M&A outcome and the multiple that you eventually achieve.
Use the right structures, to make it easy for acquirers to see the real value of your business, and how it will fit in with their current operations and future. There must be an upside for the acquirer, which is why they will value visibility in future earnings. That's also why I particularly like the Growth Framework® - with this in place, it makes it a lot easier for an acquirer to feel confident that they have made the right decision.”
The Growth Framework® advantage.
Business growth isn’t just about now – it’s about what you want for your future and the broader opportunities available to you. Because, with that in mind, decisions made today will positively impact it.
That’s why we created the Growth Framework®, so that companies can live and breathe that focus, building deep differentiation, niche, and ultimately, value – whether the end goal is an exit or not.