Annual deal activity in the UK’s recruitment mergers and acquisitions (M&A) market is up by nearly a third as of Q3 2025, despite ongoing economic challenges.

To date, there have been 58 UK recruitment-related transactions in 2025, up 32% on the same period last year and already close to the total 63 completed deals in 2024. A total of 17 UK recruitment sector-related transactions were recorded over Q3, a slight dip from an average of 20 in H1 but still ahead of last year. Deal activity remains resilient, despite continued macroeconomic uncertainties, reflected in the current trading results of listed company peers.

Strategic and private equity (PE)-backed trade buyers were the main driver of M&A activity in Q3. PE-related activity accounted for just over one-third of the 17 deals, mainly bolt-on acquisitions for existing portfolio companies. PE-backed platforms have continued to seek add-ons to enhance scale and capability, possibly in the absence of significant organic growth, especially in recruitment software and education-focused services.

Key recruitment M&A themes in Q3 2025

• Trade deals outpace PE, but add-ons for PE-backed trade continue. PE-backed platforms pursue add-ons to scale and diversify service offerings.
• New platform PE activity remains highly selective and focused on businesses with a global reach, a deep niche and either a tech platform or tech-enabled business model that differentiates from purely transactional staffing revenues.
• Tech-led recruitment platforms continue to be the leading segment overall in year-to-date 2025, however, engineering/construction and education verticals continue to see activity.
• There is lower overseas M&A activity, following an exceptionally strong Q2, but European PE should not be ignored.

Notable transactions in the recruitment sector

Graphite Capital completed the sale of Empowering Learning Group (ELG) to THI Investments, a privately owned German PE firm focused on the education sector. Launched as a start-up (and with acquisitions initially supported by RSM), ELG diversified to become a tech-enabled mission-critical services provider to schools in the UK and internationally, growing both its behavioural management training services and recruitment support. Its success underlines the importance (especially for PE) of a deep sector niche, international reach and a diversified business model that differentiates from purely transactional staffing revenues, ideally benefitting from a tech-enabled platform.

Another notable transaction was Gattaca plc’s acquisition of Infosec People Limited, a specialist cyber security recruitment consultancy headquartered in Cheltenham. Having strengthened its own balance sheet, this acquisition enhances Gattaca’s Matchtech brand by adding deep expertise in the rapidly growing cyber security sector, complementing its established capabilities in technology, engineering and defence.

Trade buyers stay out in front

Trade deals outpaced PE transactions in H1 2025, with 20 trade deals (49% of total H1 2025 deals) compared to 17 PE deals (41%). These were driven by recruitment firms seeking acquisitions to broaden sector coverage and access new markets amid challenging conditions.

Trade buyers remained the dominant exit route in Q3, accounting for seven transactions (41%) versus six by PE investors (35%). Approximately two-thirds of PE deals represent add-ons. This theme mirrors the mid-market PE landscape generally, with PE firms holding assets over longer cycles and seeking to create value by optimising portfolio company performance. Overall, the pattern reflects sustained strategic interest from both corporate acquirers and financial sponsors, particularly in niche and technology-enabled recruitment segments.

Overseas interest in UK recruitment softens

Overseas acquirers accounted for just two UK recruitment transactions in Q3, led by European buyers. Interest from overseas buyers fluctuates by quarter, with a high this year of seven deals in Q2.

The Q3 2025 deals relate to the German PE buyer of ELG (referenced above) and French recruitment firm asap.work’s acquisition of Just Construction. Although Just Construction operates as a UK-based construction recruitment specialist, it maintains strong ties to the US construction market, offering the acquirer an opportunity to leverage transatlantic expertise.

Steady stream of management buyouts

Three management buyouts (MBOs) of UK recruitment businesses were completed in Q3, accounting for 18% of total transactions and continuing the steady trend observed in Q1 and Q2.

A notable transaction was the MBO of Private Equity Recruitment Limited (PER) by its management team, marking the exit of founder Gail McManus. PER is a global search specialist serving private market professionals, with an established presence across Europe, North America and Asia.

Drop in UK activity overseas

There was only one transaction involving a UK buyer acquiring an overseas recruitment asset, compared to seven such deals in the previous quarter. The sole deal was StudyIn’s acquisition of Sun Education, an Indonesian-based leader in student recruitment across South-East Asia. Founded in 2010, Sun Education has built a strong regional presence, positioning StudyIn to expand its international footprint in the education and early careers recruitment market.

Key verticals: rebound in engineering and construction demand

Looking at key verticals, we can see a notable rebound in engineering and construction. Transactions in the sector accounted for four of the 17 deals completed in Q3 2025 compared with zero activity in the previous quarter.

Three of the four were trade acquisitions, signalling continued consolidation among specialist recruiters. The remaining transaction – IPE Ventures-backed Taskmaster Resources securing £15m funding from Bibby Financial Services – highlights the continued availability of growth capital to support expansion and acquisition efforts.

Tech-led recruitment platforms continue to be the overall leading segment so far in 2025. Other deals are well diversified across a range of verticals, with no single sub-sector being dominant in a year where the impact of economic pressures has been widespread.

A resilient sector with trends to watch

Despite ongoing trading challenges, M&A activity in the recruitment sector remains resilient, mainly driven by strategic and PE-backed trade buyers. The expectation gap on valuations between buyers and sellers also appears to have narrowed since the post-Covid boom and businesses are increasingly preparing for future exits as revenues and EBITDA are expected to improve.

Jonathan Wade, Partner at RSM UK comments: “As with any transaction, data readiness is a key theme, given the ever-increasing requirement for data quality and consistency from buyers. This is a key area where we’re actively helping our clients with our combined transaction, industry and data expertise.

“Trends in the sector will be interesting to watch. In the US, Advent and Corvex’s $1.3bn public-to-private acquisition of Heidrick & Struggles, a global executive search, interim talent and consulting business, may spark further consolidation in the sector – a trend that could extend to the UK and Europe.

Although AI may be affecting future hiring plans, unique C-Suite and consulting offerings are potentially less affected and could have increasing appeal. It will be important to see how this emerging trend develops and influences the UK, especially for those firms with deep specialisms and international or US reach.”

For more information or to discuss how we could help realise your business growth ambitions, please contact Jonathan Wade.

Related insights