Rockworth's view of the market

Employers are showing robust confidence in the UK economy, and are continuing to invest in hiring and retaining the best talent. This is demonstrated by the latest figures from the Office of National Statistics, which puts the UK employment rate at 75.8%, the highest level since comparable estimates began in 1971.

The recruitment industry closely follows the UK economy, and we have seen continued high volume M&A activity. For example Staffline expects 2018 revenues to exceed £1.1bn following its three acquisitions in the period: £84m turnover Endeavour Group in March, £74m turnover Grafton Recruitment in July, and £72m turnover Passionate About People in October.  

Our clients often ask us for our take on Brexit. Whilst we believe the impact of continued Brexit uncertainty has yet to play out, we expect to see a range of effects on recruiters. Indeed, recruiters in sectors characterised by skills shortages and those insulated from macroeconomic pressures are likely to continue to thrive.

Key insights & transactions

The market is seeing strong M&A activity from recruiters in sectors characterised by skills shortages, such as healthcare and education, particularly those in specialist and niche areas. 

Last May Independent Clinical Services acquired £37m turnover healthcare staffing firm ProClinical. Following the transaction, Richard MacMillan, CEO of ICS, said: “There is ever-growing demand for professionals with highly sought-after skills across the life sciences sector. The combination of two strong organisations will give ICS an excellent platform to invest and grow in the global life science staffing market.”

Private equity interest in the industry is increasing. This is helping business owners to de-risk whilst empowering management teams to unlock growth potential. 

Logan Naidu, founder & CEO of professional services recruiter Dartmouth Partners, opened an office in Frankfurt last September after securing growth funding from Literacy Capital in June.

Also in September, private equity firm IPE Ventures bought marketing recruitment consultancy EMR from FiveTen. After the deal, EMR’s managing director Serrol Osman said: “The acquisition will both support and expedite our growth; the business has substantial potential to be realised and this will energise the EMR team to fulfil our strategy.”

There is significant interest from overseas buyers. We attribute this to a range of factors, from investor confidence in the UK market to the opportunities created by the UK’s geographic proximity and cultural alignment to other markets, as well as the weakening pound. 

For Japanese group Outsourcing Inc expansion into the UK, Australia and other Commonwealth countries is planned following its £21m acquisition of public sector recruitment specialist Allen Lane in August.

Transatlantic interest is also strong, with Chicago-headquartered PeopleScout making its first foray into the UK in June with the £20m acquisition of recruitment consultancy TMP Holdings.

Rockworth's experience in Recruitment & Human Capital 

Over a number of years we worked with executive search firm SJB Group to strategically position the business for an eventual sale. After a competitive process it was sold to Manpower, the third-largest staffing firm in the world. SJB now operates as a wholly-owned subsidiary of Manpower’s Experis division, and its founders continue to oversee the business in partnership with Manpower UK’s board. 

Rockworth advised the founders of PDS Group, a Wiltshire-based apprenticeship programme provider, which they had grown to a UK-wide team of highly skilled specialist consultants. The ultimate buyer, US-headquartered IT training firm Global Knowledge, bought strong cultural alignment, a complementary client fit, and achieved an exit for the founders.

We worked with the husband-and-wife team behind MOT Models. Over 25 years they had grown their agency to source and supply fashion models to photographers, designers and production companies across the UK and Europe. We generated diverse interest in the agency to unearth the best strategic fit, with the founders proceeding with Dutch recruitment group Vedior (now part of Randstad).