M&A activity in the recruitment sector

Overview of UK Recruitment Sector Transactions 2023

Deal activity in the UK recruitment sector proved remarkably resilient in 2023 with 58 deal completions of UK assets, despite challenging macro-economic conditions. This was underpinned by:

  1. buyer focus on key sectors such as tech, healthcare, and education;
  2. continued private equity (PE) interest (although exits by PE-backed firms were scarce); and 
  3. the breadth and diversity of the industry, which generated a wide range of opportunities.

2022 had seen a peak of 76 deals fuelled by a post-Covid hiring boom. This surge drove EBITDA growth through higher volumes and strong productivity metrics. Sellers were able to achieve their strategic exit EBITDA goals, whilst buyer appetite was assisted by PE dry powder and low interest rates.

In 2023, this began to unwind. Rising interest rates meant some buyers preferred to focus on internal issues and debt reduction. This shift also contributed to a stagnation in the global economy, particularly impacting permanent placement volumes – not just in the UK, but also constraining key growth markets such as the US.

Nevertheless, deal opportunities continued. Buyers focused on quality, with attractive niches in tech, healthcare, and education (especially businesses with a greater mix of stickier ‘recurring’ contract revenues). These verticals accounted for approximately half of all deals and three-quarters of all PE deals involving UK assets in the sector.

All this meant that due diligence scrutiny, particularly of current trading, had never been greater. As processes lengthened, effective preparation for sale and pragmatic solutions to bridge buyer and seller aspirations, such as earn-outs, became increasingly important.

These key themes, alongside strategic divestment such as by listed entities Capita and Impellam, have continued into Q1 2024. We further analyse key themes and trends below.

  • Quarterly trends
  • Overview of buyers
  • Review of PE buyers
  • Review of overseas buyers
  • UK buyers expanding overseas

Quarterly trends


Q1 2023 saw a relatively high number of completions at 21 (44% of the annual total).

This peak largely reflected the finalisation of deal activity from the previous year prior to the onset the onset of toughening trading conditions towards the end of Q4 2022.

However, few new projects were launched during this period of economic transition, leading to a low in Q2 completions of only 10.

Encouragingly, the quarterly completion trend improved consistently in both Q3 and Q4 as both trade, and increasingly PE, returned to the market. The 15 deals completed in Q4 were in line with the average run rate for the year.

This trend suggests that the number of completions in 2024 may achieve a similar level to 2023, supported by a broadly consistent run rate in the first two months of 2024. We would expect underlying project activity to start to increase in the second half of the year, and continue into 2025, as momentum in profitability across the industry rebuilds.

Overview of buyers


Of the 58 deals completed in 2023 involving UK assets, 40% (23 deals) were acquisitions by either a PE house making a primary investment, or add-on acquisitions by existing PE-backed portfolio companies. This has remained largely consistent with the 42% observed in 2022.

Trade buyers remained a key exit route, representing 27 (47%) of transactions. This compares to 35 transactions in 2022 but is broadly consistent in percentage terms (46%). UK trade buyers contributed to the most completions within this category, accounting for two-thirds of trade deals, with overseas trade buyers making up the remaining third.

The market also attracted interest from listed clients in 2023, such as the acquisition of Vercida Consulting by Hays in May 2023. 

The number of debt or non-PE backed MBOs (Management Buyouts) and acquisitions made by private individuals rebounded following a relative low in 2022. In 2023, there were eight MBO, EOTs (Employee Ownership Trusts), and private individual transactions (14%), an increase from five in 2022. This reflects tougher economic conditions than during the post-Covid boom, with vendors more open to exploring alternative or partial exits.


In 2023, PE showed a strong focus on tech, healthcare, and education. Collectively, including acquisitions of tech platforms in the space, these represented approximately 75% of PE deals in the sector (or two-thirds if excluding tech/software platforms).

Out of the 23 PE deals, five were acquisitions of technology recruitment specialists, and three were recruitment platforms/software. This compares to six and eight deals respectively out of 32 PE deals in 2022. PE still wants its portfolio companies to have a strong digital and AI strategy, focusing on niche verticals, international reach, and an expanding focus on tech consulting or SOW (Statement of Work) based propositions.

PE also demonstrated a strong interest in healthcare (26% of 23 deals) and education (17% of 23 deals) verticals. This is indicative of the structural staff shortages faced by the UK healthcare and education sectors, despite cost control pressures and political uncertainties.

Review of PE buyers

In 2022, approximately 50% of PE transactions were via ‘secondary’ add-ons rather than new, stand-alone ‘primary’ acquisitions into the industry (see chart above). However, this trend changed in 2023, with ‘primary’ PE deals accounting for 74% of completed PE deals. 

This could mean that we see an increase in add-on acquisitions again in 2024 as PE houses focus on buy-and-build strategies for their most recent acquisitions. However, sometimes the distinction between primary and secondary acquisitions are not clear-cut.

Although listed firms wanted to reduce gearing and focus on core activities, this presented opportunities for PE.

A good example of this is Twenty20 Capital, a London-based PE firm specialising in the sector, which made four acquisitions into the UK recruitment market in 2023. Notably, these included the acquisition of Impellam Group’s healthcare division in May 2023, and the acquisition of Global Group, a healthcare staffing specialist, in January 2023. These verticals represent key areas of interest for potential bolt-ons in 2024.

Additionally, Inspirit Capital acquired Capita plc’s resourcing division as part of the Group’s wider divestment plans.

UK technology recruitment business, Jumar, received its second investment from Aliter Capital, aligning with Aliter’s strategy to develop a leading technology resourcing and solutions group. 

LDC invested in the talent data analytics platform Horsefly in March 2023. This highlights the increasing interest in recruitment platforms from the PE market. 

The UK recruitment sector also saw investment from Mobeus (Ellis – tech), Three Hills Capital (Kernel – multi-niche), Maven Capital (Castleview Group Training), BGF (Bridge Education and Provision UK – both education), among others. 

Literacy Capital’s partial exit of Kernel Global to Three Hills Partners was a rare example of a PE exit in 2023, with this part of the market generally being more subdued.

Review of overseas buyers

UK vs overseas bidders

When excluding the EOTs/MBOs from our analysis, we see that the proportion of overseas buyers of UK assets decreased from 29% in 2022 to 26% in 2023. This decline appears sharper on a nominal basis, with 26 deals completed by overseas PE or trade buyers in 2022, compared to the 13 completed in 2023.

A significant reason for this decline was the relative absence of US buyers in the UK market. In 2023, only two UK targets were acquired by the US, compared to 12 transactions (48%) in 2022. This reflects both:

  1. the wider impact of overseas buyers wishing to reduce gearing; and 
  2. the toughening market conditions in the US. 

UK businesses previously expanding rapidly into the US (and appearing ripe for acquisition) encountered greater challenges. With newer fee earners less used to tough conditions in 2023, UK management teams faced key decisions in scaling back headcount and the rate of organic expansion. 

While international interest from US and Asia-Pacific buyers declined, European buyers remained active in the UK. Multiple transactions were completed with buyers across France, Ireland, Spain, and the Netherlands (also noting HeadFirst’s £438m acquisition of Impellam Group).

Japanese buyers were prominent in the global market but did not complete any deals in the UK. This might change in 2024 as Bain Capital have recently invested in major player Outsourcing Inc. 

Overseas PE declined more sharply than overseas trade. In 2023, four transactions by overseas PE buyers were completed, compared to 14 in the year prior (where transactions by overseas trade buyers remained fairly consistent at 25%).

UK buyers expanding overseas

UK acquirers of overseas targets

In 2023, UK recruitment firms acquired 21 overseas assets. Of these acquisitions, 43% (nine deals) were by PE-backed firms. The PE interest was largely favoured towards bolt-on opportunities, which made up 67% of the nine PE transactions.

This reflects PE’s appetite and experience in using bolt-on opportunities to expand its UK recruitment platforms internationally.


In 2023, UK buyers were responsible for the acquisition of 21 overseas targets. As noted, this includes significant interest (43%) from PE-backed acquirers expanding internationally.

The largest target geography was the US, accounting for 52% of all targets. This could be due to the continued growth of the US market, now estimated to be worth approximately $220bn.

Australia was the second most popular country, accounting for two deals in 2023. This is a potentially less saturated market and provides improved access into APAC markets for UK businesses.

The market also saw deals across Turkey, Brazil, China, Bermuda, Spain, the Netherlands, and France. 

Outlook for 2024

Jonathan Wade, RSM Corporate Finance’s recruitment sector lead, commented:

Despite the macro-economic backdrop, the resilience in deal volumes in 2023 has been encouraging.

The mix of deals favoured tech, healthcare, and education verticals, particularly well-run businesses with attractive niches, strong contract revenues, and often international potential. There has also been a theme of diversification of the business model upstream, such as more consulting/SOW services or ‘train to deploy’ approaches. 

RSM were delighted to support Nashtech’s (the tech consulting arm of the former Harvey Nash brand) acquisition of Knoldus Inc and Fruition IT’s sale to Erisbeg Private Equity, both of which are good examples of this theme. 

Additionally, internal expansion by UK firms, especially PE-backed portfolio companies, continued to be a feature. Healthcare services and staffing business Acacium (formerly ICS) is a good example of this, and we were thrilled to support their acquisitions in the US (Sumo Medical) and Australia (Sanctuary), leveraging our international network.

We expect these themes to continue in 2024. Private equity will remain selective on opportunities but still have plenty of dry powder in funds to deploy. The pause in deal activity, caused by understandable buyer caution at potentially buying at the top of the cycle, is unwinding.

March 2024 has already seen the significant acquisition of technical staffing specialist Morsons Group by Onex Partners (owners of Acacium).

Those businesses which have proven their resilience to market conditions in 2023 will stand out as higher quality assets.

Whilst a number of businesses will be focusing on rebuilding organic growth and EBITDA in 2024, other buyers will see opportunities for value. There may also be partial divestment opportunities (noting Trinnovo’s sale of Bio Talent to Investigo in late 2023). 

We also expect US buyers to start to return to the market in 2024, noting that we have already acted for large San Francisco sports brand, the 49ers (owners of Leeds United amongst others), in their acquisition of the niche sports executive search business SRG.

Due diligence scrutiny by buyers continues to increase, focusing on data and KPIs and not just traditional financial and compliance matters. Effective preparation for sale by sellers has never been more important to value.