M&A Trends in Recruiting Firms: A Look Back at Recent Years

Mergers and acquisitions (M&A) among recruiting agencies have significantly increased in recent years. This trend has reshaped the landscape of boutique recruitment firms across key markets like the UK, US, France, and Germany. Here, we'll explore the key developments, notable examples, and the main reasons behind this surge.

A Surge in Recruitment M&A Post-2020

The recruitment sector witnessed a noticeable rise in M&A activity, especially after the COVID-19 pandemic slowdown in 2020. In the UK, for example, the year to Q3 2021 saw 80 recruitment-sector deals – the third-highest annual volume in a decade. From 2021 onwards, activity surged sharply, driven by strong job markets and abundant investment capital. For instance, the UK saw 106 recruitment-related deals in 2022 alone, compared to 92 in 2021. In the US, recruitment deals reached a record 139 in 2022. Globally, 324 staffing industry deals occurred that same year.

Notable Mergers & Acquisitions (2020–2025)

United States:

Korn Ferry acquired Lucas Group (2021): Korn Ferry expanded into mid-level placements.
Diversified Search Group acquired Yardstick Management (2023): Enhanced diversity hiring capabilities.
Motion Recruitment acquired MATRIX Resources (2022): Strengthened presence in tech staffing.

United Kingdom:

Morson Group acquired Cornwallis Elt (2021): Enhanced tech and digital recruitment capabilities.
Teneo acquired Ridgeway Partners (2021): Expanded executive search expertise.
YourConstruction merged with Energised Staffing (2021): Combined expertise in construction recruitment.

France:

Actual Leader Group acquired multiple boutiques (2022-2023) including Kobaltt (IT), CCLD (sales), and Clementine (digital executive search).
Adecco acquired Qapa (2021): Boosted online recruitment capabilities.

Germany:

Heidrick & Struggles acquired Atreus (2022): Expanded interim executive placement services.
Synergie acquired Runtime Group (2023): Increased German market presence.

Key Patterns in Consolidation

Several patterns have emerged from these mergers:

Larger firms buying smaller boutiques to gain specialized knowledge and market access.
Private equity firms building larger platforms by acquiring numerous smaller agencies.
Agencies merging for complementary niches, combining strengths for broader market appeal.
Cross-border deals for geographic expansion, tapping into international talent pools.

Why Are Recruitment Firms Merging?

Several factors have driven these mergers:

Market Opportunities: Post-pandemic labor shortages created high demand for recruitment services.
Economic Uncertainty: Rising costs and economic fluctuations led some owners to sell while valuations were favorable.
Strategic Growth: Firms aimed to quickly grow by acquiring agencies with established client relationships and candidate databases.
Sector Specialization: Buyers acquired agencies specializing in high-demand sectors like healthcare, IT, and digital roles.
Technological Integration: Firms sought acquisitions to access advanced technology, AI, and digital recruitment capabilities.
Owner Exits: Many founders reached retirement age or sought liquidity after years of growth.

Conclusion

The recent years have been transformative for recruitment agencies, marked by increased consolidation, strategic acquisitions, and sector specialization. Driven by economic conditions, strategic ambitions, and technological advancements, this trend shows no signs of slowing down soon, shaping the recruitment industry's future landscape significantly.