M&A Breakfast Briefing - Key trends, insights and what recruitment business leaders should expect

This morning, recruitment leaders from across the region joined us in London for an in-depth look at mergers and acquisitions in the staffing sector. The session opened with remarks from our EMEA Managing Director, Steve Barnhurst, who reflected on shifting market sentiment over the past few months. Steve highlighted a renewed sense of confidence in the sector, with more founders actively exploring acquisitions and buyers increasingly open to conversations. His message was simple: activity is rising again, and firms that can demonstrate focus, efficiency and modernisation will be the ones that attract attention from investors and acquirers.

Steve then introduced our guest speaker, Philip Ellis from Optima, who delivered an exceptionally comprehensive breakdown of current and emerging M&A dynamics in recruitment. Philip began by sharing his background in buy-side and sell-side advisory, having completed deals across healthcare, staffing, professional services and the wider future-of-work space over several decades.

‍Deals are still getting doneDespite the challenging economic backdrop of the past 18 months, Philip reinforced that high-quality deals continue to complete across multiple verticals. Motivations to sell vary, but Philip noted that well-run businesses with strong recurring revenue, healthy temp/contract books and established client relationships remain highly attractive to buyers and investors.What drives value?

‍A major theme throughout the session was valuation. Philip emphasised that buyers care far more about current performance and future visibility than past historic peaks. Run-rate matters more than year-end numbers. Clean financials, sustainability of earnings and resilience across client portfolios are increasingly scrutinised. Balance sheet structure also plays a major role, particularly around debt, invoice financing and working capital.He outlined several characteristics that consistently command stronger multiples:

• Clear specialism and strong brand recognition in defined niche markets
• Recurring contract or temp revenue with healthy gross margins
• Longstanding, embedded client relationships
• Scalable systems, automation and effective use of technology
• Low dependency on founders or a small group of key billers

By contrast, businesses with high client concentration, inconsistent margins or weak visibility of earnings often attract discounts or more cautious deal structures.

‍The role of technology

‍Both Steve and Philip highlighted technology as a growing differentiator in M&A. Firms leveraging automation, data and AI to run more efficiently are already gaining an edge. Although AI is still in its infancy in shaping M&A deals, Philip noted a recent deal in which the target’s technology adoption directly influenced valuation discussions, signalling the direction of travel for the wider market. Buyers increasingly recognise that scalable, tech-enabled staffing businesses can deliver more with less headcount, strengthen margins and grow without following the traditional boom-and-bust hiring cycle.

‍Preparing for a Sale

‍For owners considering a transaction in the next few years, Philip advised a preparation window of around 24 months. This includes tightening financial reporting, ensuring compliance, reducing key-person risk, improving data quality, and demonstrating a repeatable, scalable operating model. He also stressed the importance of robust due diligence preparation across financial, legal and commercial domains.

‍Outlook for 2026

‍Looking ahead, Philip was cautiously optimistic. Sentiment is improving, international buyers are showing renewed interest in UK recruitment assets, and niche specialist firms continue to outperform the wider market. While conditions remain challenging, well-positioned staffing businesses are finding ways to grow and differentiate even in uncertainty.

‍A great morning of insight

‍The session concluded with an open Q&A and continued discussion over coffee, giving attendees the chance to ask more specific questions about valuation, deal timelines, and market conditions.Thank you to everyone who joined us. And a special thank you to Philip Ellis for sharing such valuable and practical insight.

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