Lets face it, there are a lot of websites out there all pointing to different multiples for valuing your recruitment agency. If you type the question into Google, the answer is usually that any recruitment agency is worth at least 6 x EBITDA.

So if we take the figure of £300,000 in annual net fee income, is your agency really worth £1.8 million?

What do you think? Would you pay £1.8 million for a recruitment agency that may have 2 members of staff, 10 clients without any future contractual commitments to you and 50 contractors?

At the end of the day, your recruitment agency is worth what a buyer will pay for it. No-one in their right mind is going to pay £1.8 million for a recruitment agency specialising in say general permanent recruitment at a junior end, with very limited profit margins and wholly dependent on the connections the owner has built up.

Valuations can be common sense, although unfortunately this can go out of the window when recruitment agency owners start applying accountancy multiples that are mostly pie in the sky!

If you have an agency with a loyal staff team paid reasonable wages, a set of longstanding contracts with highly regarded clients in a sought-after sector and your net fee income is £5 million, you may also find that a high valuation is not unrealistic.

Your recruitment agency is a professional service business. You have limited assets to sell, you have the professional capability of your staff and yourself to offer a buyer, evidence of future income and your reputation. What a buyer is prepared to pay for that depends on a lot of factors that all affect the likely sale price.

Multiplying figures by other figures and coming up with something utterly random and unjustified by physical evidence is very unlikely to reflect reality!

If you would like a real world valuation based on your circumstances, please get in touch.