Owner's Guides
Recruitment Agencies for Sale: Selling a UK Staffing Company
Who is buying UK recruitment agencies now, real EBITDA and NFI multiples by size, the temp/perm split, process, tax and pitfalls.
The order book is the business.
If you're comparing recruitment agencies for sale against your own numbers, the honest starting point is that turnover tells you almost nothing. Two agencies billing the same top line can have very different economics once you separate worker pay from actual fee income. This page covers who is buying UK staffing companies for sale right now, what a business realistically prices at by size and model, the difference between temp and perm valuations, how the process runs, the tax position, and where sales fall apart.
BDO's March 2026 M&A report puts the UK recruitment industry at £25 billion in 2025, down 3% and the first annual decline since the pandemic. BDO recorded 97 UK recruitment transactions in 2025, down 10% year on year, with generalist recruitment, recruitment platforms/software and IT the most active subsectors. The prior year told a different story: 104 UK-involved deals in 2024, up 49% on 2023. Trade buyers completed 64 of those, direct private equity 18, VC investors 12, employee ownership trusts (EOTs) five, MBOs three and private individuals two. Trade represented 62% of deals, PE plus VC around 29%. Recruitment Accountants' sample of 78 UK agencies showed Q1 2026 net fee income (NFI) up 8.4% year on year, a fragile improvement after a 2025 benchmark where staff costs rose from 62% to 66% of NFI and net profit fell from 16% to 11%.
01
Who Is Buying UK Recruitment Agencies Now
UK trade and PE-backed consolidators. The most active category by volume. Morson Group bought InterQuest's UK business in 2024 and PTS Advance in 2025. Taskmaster Resources, backed by Adama Capital, bought RE Recruitment in 2025. Salt Recruitment Group bought Zelo Digital. Interaction Recruitment bought Verve People. TXM Group bought Petroplan. Fawkes & Reece bought Venture Contracts. Kingdom Services Group bought Mc Personnel. These buyers want new geography, client access, contractor books and sector desks, and can push central payroll, finance and compliance costs into a shared platform. Typically 3.5x to 7.0x EBITDA for ordinary profitable bolt-ons, 6.0x to 9.0x for scarce, managed specialists.
Overseas strategic buyers. Aya Healthcare acquired UK healthcare staffing business ID Medical in 2024. Korn Ferry acquired Trilogy International, a UK technology and business-transformation recruiter. Overseas investment into UK recruitment rose from nine to 16 deals in 2024. These buyers want UK market entry, specialist talent pools and framework access, usually seeking control or 100% ownership.
Recruitment-specific investment groups. Recruitment Entrepreneur and Bluestones Investment Group were BDO's named serial investors in 2024, together around 6% of deal activity. Recruitment Entrepreneur reports over 30 portfolio companies; Bluestones runs acquisition, investment and joint-venture models and states it provides 100% of upfront funding for its JV model (business funding, not a full cash purchase). These investors often retain founder equity and operating autonomy, typically at 3.0x to 6.5x EBITDA with rollover.
General PE and growth capital. CorpAcq, backed by TDR Capital, took a majority stake in Axon Moore in 2025 and already owned Strategic Resources. Freshstream acquired a majority of G2V Group in December 2024. BGF invested in Metric Search, Onex in Morson Group, Quad Partners in Edwin Group, Pricoa Private Capital in TeacherActive. Platforms generally need £1 million-plus EBITDA and management depth, pricing 5.0x to 8.5x EBITDA with rollover and leverage against a three-to-five-year exit case.
EOT and MBO. 2024 examples included Hoop Recruitment and Standguide as EOTs; BDO counted five EOTs and three MBOs that year. EOT trustees must obtain independent market-value support, and consideration is usually paid over time from future company cash flow rather than a strategic premium.
Private individual or MBI. Two of BDO's 104 UK-involved 2024 deals fell here, though it's more common below the disclosed-deal threshold, typically pricing 2.0x to 4.0x sustainable owner-adjusted earnings with seller finance or an asset purchase.
Buyer fit also runs by sector: industrial and blue-collar temp draws Taskmaster/Adama, Interaction, Kingdom and Fawkes & Reece; technology, engineering and energy draws Morson, G2V/Freshstream and TXM; education draws Edwin Group/Quad and TeacherActive/Pricoa; healthcare draws Aya/ID Medical and RSS Global/Medacs; executive search draws Korn Ferry and the Recruitment Entrepreneur portfolio.
02
Valuation: Use the Right Metric
Turnover is misleading for temp businesses because reported revenue includes worker pay and other pass-through costs. Two agencies with identical turnover can sit at completely different multiples once you strip that out. Three metrics matter, in order:
Net fee income (NFI or gross profit) is permanent placement fees plus the gross margin on temp/contract placements plus any retained-search, RPO/MSP or advertising income. Confirm whether holiday pay, employer NIC, pensions and umbrella charges sit above or below the NFI line, because definitions vary.
Adjusted EBITDA is the primary basis for most share sales. Start with reported EBITDA, replace owner pay with a market salary, strip genuine one-offs, and add back the recurring cost of replacing owner billings, missing management and under-invested compliance.
Enterprise value to equity value is the final step. The headline multiple normally produces cash-free, debt-free enterprise value on a normal level of working capital. Deduct borrowings, invoice-finance drawings and debt-like items, add surplus cash, then adjust for a working-capital shortfall or excess. A temp-heavy seller can end up with materially less cash than the headline EV suggests if payroll funding and aged debtors aren't handled properly at completion.
03
Multiples by Size
| Sustainable adjusted EBITDA | Typical private EV/EBITDA | Typical buyer | Conditions |
|---|---|---|---|
| Below £250,000 | 2.0x-3.5x | Individual, MBI, local bolt-on | High owner dependence usual. Asset/book sale, deferred consideration or seller finance common. |
| £250,000-£750,000 | 3.0x-5.0x | Regional trade buyer, specialist investor, MBO | Upper end needs repeat clients, a transferable team and limited concentration. |
| £750,000-£2 million | 4.5x-6.5x | National trade buyer, PE-backed bolt-on, overseas strategic | Quality of earnings, management depth and contract/temp visibility become decisive. |
| Above £2 million | 6.0x-8.5x | PE platform, large trade buyer, international group | Needs scalable management, multiple desks, low concentration and a credible growth plan. |
| Exceptional specialist platform | 8.0x-10.0x+ | Strategic or competitive PE process | Reserved for scarce niches with recurring contract gross profit and low owner reliance. |
These are estimate ranges built from public and precedent anchors, not quoted market prices. The one well-established public anchor is BDO's tracked listed recruitment companies for calendar 2024, trading at 5.5x to 7.8x EV/EBITDA, 6.6x average, a public-market range for larger diversified groups rather than a direct SME comparison. A separate Mark2Market/BSN sample of eight disclosed UK precedents (January 2019 to June 2024) showed 7.4x mean, 8.2x median EV/EBITDA, but the sample is small and biased toward larger disclosed deals. As a cross-check, a healthy 20% EBITDA-to-NFI conversion against a 5.0x EBITDA multiple implies roughly 1.0x NFI; the weaker 11% conversion seen in 2025 implies materially less, which is why buyers test both the amount and the quality of conversion.
Worked example. A generalist agency with £1.4 million adjusted EBITDA has a supervisor layer under the founder, a top client at 18% of NFI, and half its NFI from recurring temp/contract placements with stable margin. That sits in the £750,000-£2 million tier at the middle of the range, so a national trade buyer prices it at 5.5x: enterprise value of £7.7 million. After £600,000 of invoice-finance drawings, a £200,000 working-capital adjustment against the seller and £250,000 in transaction costs, equity proceeds land around £6.65 million before tax.
04
Is Temp Worth More Than Perm
Often, but not automatically. Temp/contract-led staffing typically trades at 0.6x to 1.2x NFI as a cross-check, supported by long average assignment life, low contractor churn, contracted margins and clean payroll, IR35 and umbrella compliance. Permanent-contingent recruiters sit lower, at 0.4x to 0.8x NFI, because a perm desk is more cyclical even with repeat mandates. Retained executive search can reach 0.8x to 1.4x where retainers are staged and partner dependence is low. A distressed book, dormant database or owner-only desk is worth 0x to 0.3x: value only attaches to active, lawful, contactable records and live assignments that actually transfer. Structurally, temp-heavy sellers carry a bigger working-capital and invoice-finance bridge (see invoice finance for recruitment businesses), because weekly payroll runs against 30-to-60-day client receipts. Get that bridge wrong and headline EV overstates the cash you actually receive.
05
What Moves the Multiple
- Top client below 15% of NFI, top five below 40%, supports the multiple; above 25% or a terminable single-held relationship discounts it or kills the deal.
- Founder producing under 10% of NFI with management able to run the company supports value; above 25%, with the founder owning key client contacts and planning to leave immediately, does not.
- 50%-plus of NFI from recurring temp/contract, retained search or SOW work with stable margin supports a premium over lumpy contingent perm revenue.
- Three-year organic NFI growth with stable monthly cohorts beats a forecast-led valuation or a declining trend.
- Clean AWR, PAYE, NMW, holiday pay, IR35 and right-to-work files matter; an HMRC enquiry or licence breach does not remediate quickly.
- A current, lawful candidate database with active engagement outweighs a large but stale or scraped one, which can carry ICO exposure instead of value.
06
Deal Structure
Cash at completion for owner-managed deals commonly runs 50% to 80%, with 20% to 50% deferred or contingent over one to three years against EBITDA, NFI, gross profit or consultant/client retention metrics. PE rollover, where offered, commonly runs 10% to 40% of proceeds. An EOT sale must be supported by an independent market valuation and is typically paid over time from future cash flow, not an automatic premium. Whatever the mix, confirm whether the invoice-finance facility is recourse or non-recourse, which debtors are eligible, and whether the buyer must refinance it on completion; restricted collections are not surplus cash.
07
Regulation and Transfer Mechanics
From April 2026 the Fair Work Agency, an executive agency of the Department for Business and Trade, enforces employment-agency standards, National Minimum Wage, gangmaster licensing and labour-exploitation rules, alongside the Employment Agencies Act 1973 and the Conduct of Employment Agencies and Employment Businesses Regulations 2003. A mixed agency supplying both permanent placements and temps must comply with both regimes, and an employment business must pay temps for hours worked even if the hirer hasn't paid.
From 6 April 2026, the agency holding the contract with the end client is responsible for ensuring any umbrella company in the chain operates PAYE correctly; HMRC can recover underpaid PAYE or Class 1 NIC from that agency directly. This makes umbrella and IR35 diligence a completion-critical item, not a paperwork afterthought.
Transfer mechanics differ by structure. A share sale keeps the same employing company, so TUPE normally isn't triggered, but change-of-control clauses, GLAA notifications and lender consent can still apply, and the buyer inherits historic liabilities. An asset sale moves selected contracts and assets to a new entity; client, MSP and framework contracts may need assignment or novation, and sector licences (GLAA for agricultural labour supply, CQC and equivalents for care, Home Office sponsor licences) generally do not transfer automatically. A GLAA licence, for example, is held by the legal entity and is not a saleable asset; changes to directors or controllers generally require notice within 20 working days. Candidate and client data sits under UK GDPR and the Data (Use and Access) Act 2025: an asset sale that changes the controller needs documented lawful basis and transparency to data subjects, and an NDA alone does not create one.
08
Tax at July 2026
Business Asset Disposal Relief is 18% for qualifying individual share disposals from 6 April 2026, up from 14% in 2025/26, on a lifetime qualifying-gain limit of £1 million. Standard individual CGT rates are 18% and 24%, with most gains above the remaining basic-rate band taxed at 24%. A corporate seller may use the Substantial Shareholdings Exemption where broadly at least 10% of ordinary share capital was held continuously for 12 months within the permitted six-year lookback. An asset sale by a company is taxed within the company at up to 25% Corporation Tax, followed by a second tax charge on extraction, which is why sellers usually prefer a share sale. Buyers pay 0.5% Stamp Duty on a UK share purchase over £1,000. For qualifying EOT disposals on or after 26 November 2025, only half the gain is CGT-exempt, with BADR and Investors' Relief unavailable where EOT relief is claimed.
09
Process and Timeline
| Stage | Typical duration | What happens |
|---|---|---|
| Exit preparation and vendor review | 4-10 weeks | 36 months of monthly NFI/EBITDA by desk, client and consultant; temp/perm split; contractor cohorts; adjusted EBITDA bridge; licences and compliance sample |
| Teaser, IM and buyer list | 2-4 weeks, overlaps prep | Anonymous description, named buyer map, controlled disclosure plan to avoid consultant or client leakage |
| Confidential outreach and NDAs | 3-6 weeks | Buyer qualification, proof of funds, staged release of client and candidate information |
| Indicative offers and management meetings | 3-6 weeks | Comparing EV, completion cash, working-capital peg and earn-out terms, not just headline multiple |
| Heads of terms and exclusivity | 1-3 weeks | Price basis, cash-free debt-free terms, permitted leakage, earn-out definitions |
| Diligence (financial, tax, legal, compliance, IT) | 6-12 weeks | QoE, NFI definitions, client calls, AWR, PAYE/NIC, umbrella and IR35, worker status, GDPR, ATS/CRM ownership |
| SPA, tax covenant and financing | 4-8 weeks, overlaps diligence | Warranties, tax and compliance indemnities, TUPE/novation, regulatory conditions, lender refinance |
| Completion and transition | 1 day plus 3-12 months | Staff and client communications, payroll continuity, bank/factor control, seller handover |
A prepared UK owner-managed agency typically runs 4 to 7 months from launch to completion. A small clean bolt-on can close in 10 to 16 weeks; a regulated, cross-border or PE-financed deal can take 6 to 9 months.
10
Common Mistakes
Valuing gross billings as revenue. Temp wages inflate turnover, and failing to reconcile to NFI and cash conversion makes the asking multiple meaningless.
Ignoring the working-capital and invoice-finance bridge. Weekly payroll against 30-to-60-day client receipts can leave a large completion funding gap; factoring drawings, restricted cash and holiday-pay accruals all reduce equity proceeds.
Client concentration and non-transferable terms. A top client, PSL or public framework may be terminable or non-assignable, and repeat invoices are not the same as contracted recurring revenue.
Founder or star-biller dependence. If client relationships and niche knowledge sit with one person, buyers respond with retention terms, rollover, earn-out or restrictive covenants, or they walk.
PAYE, umbrella, IR35, AWR and holiday-pay leakage. Historic underpayments and weak SDS records can exceed a year's EBITDA, and the April 2026 umbrella rule puts direct recovery risk on the agency nearest the end client.
Treating the candidate database as automatically saleable. Stale CVs, unclear lawful basis and ignored deletion requests can remove database value and create ICO exposure.
Assuming licences and sponsor permissions transfer. GLAA and Home Office sponsor licences follow different change rules, and closing before required approvals can stop trading.
11
FAQ
Most profitable owner-managed agencies fall around 2.0x to 6.5x sustainable adjusted EBITDA depending on size and transferability. Managed platforms can reach 6.0x to 8.5x, and exceptional specialists can exceed this. These are typical ranges, not quoted prices.
Use adjusted EBITDA as the main enterprise-value basis and NFI as the sector cross-check. Gross turnover is especially unreliable for temp businesses because it includes worker pay and statutory pass-through costs.
Often, but not automatically. A long-duration contract book creates visible weekly gross profit, while a perm desk is more cyclical. Temp premiums disappear where margins are thin, clients are concentrated or umbrella and IR35 compliance is poor.
Usually not in an asset sale. Assignment, novation and change-of-control clauses need reviewing. A share sale keeps the contracting entity in place, but change-of-control consent may still be required.
About 4 to 7 months from launch for a prepared company. A simple small bolt-on can take 10 to 16 weeks; regulated, cross-border or PE-financed deals can take 6 to 9 months.