Service: Deal Advisory 

Industry update: Recruitment

14 Feb 2022

Following a period of uncertainty, the UK recruitment sector has now stabilised and is well-positioned for future growth.

The industry is currently attracting strong M&A and investment activity, with key players looking to capitalise on a buoyant economy and the sector’s significant market fragmentation. 

The performance of the UK recruitment industry can be significantly influenced by changes in the wider economy and a level of unemployment. As such, the wider industry suffered a challenging year off the back of the Covid-19 pandemic. 

Despite this, there is increasing reason for optimism, with firms restarting their hiring practices and UK job vacancies hitting record levels in the three months to November 2021, causing increased demand for recruitment services. 

Here, Gerald Edelman partners, Deval Patel and Hiten Patel look into the changing landscape of the recruitment sector. They update us on the industry’s market segmentation and map the competitive landscape. As well as highlighting key deal activity and investments and their thoughts on how the industry is expected to grow post-Covid19. 

Key takeaways from this report include: 

  • The recruitment sector is expected to rebound in the coming year with revenues forecasted to grow by 25.4% in 2021-2022 to what would be record levels.
  • The industry can be broadly split into three service offerings, general recruitment, executive and managerial recruitment, and HR strategy and consulting – the most active segment being general recruitment accounting for 49.3%.
  • The recruitment industry exhibits a very low level of market concentration, with the top four players (Hays plc, Robert Walters plc, PageGroup plc, Impellam Group plc) accounting for just 7.2% of industry revenues. 
  • The year to September 2021 saw 80 deals completed in the UK recruitment space, representing the third-best performing period in the past decade. This was in part due to the completion of transactions that were delayed as a result of the pandemic. 
  • Increased financial investor activity was another key driver of deal volume in the year, accounting for 46.3% of deals. This is in comparison to a historical average of only 28.6%.

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