We’ve recently had a number of recruitment agency clients approach us to query figures from online valuation calculators. While these calculators might offer a convenient starting point, they often fail to capture the complexity and nuances specific to the recruitment sector, leading to misleading valuations.
When looking at a business’s financial health, especially for small businesses or law firms, one key number to check is EBITDA – which stands for Earnings Before Interest, Taxes, Depreciation, and Amortisation. This number helps measure how profitable a business is before extra costs (e.g. taxes or loan payments) get added in.
Currently, BADR helps business owners save on taxes when selling their businesses. It lets them pay only 10% Capital Gains Tax on qualifying sales, up to a lifetime limit of £1 million. (BADR explained – impending changes to Business Asset Disposal Relief, 2024) This relief has been a big help for entrepreneurs, making it cheaper to sell their businesses compared to normal tax rates.
The recent budget announcements by Chancellor Rachel Reeves introduce several tax changes that could significantly impact the buying and selling of businesses in the UK.
We are often asked why we think we can succeed and find buyers when there is a statistic peddled about online that only 5% of SME businesses find a buyer. Just a quick look at our order book earlier today tells me this is statistic is probably made up by parties with vested interests.
In the conversation we have with recruitment agency owners who want to build to sell, the first question we ask is ‘why?’. It may seem like a simple question to some, “to become wealthy,” but not everyone’s ambition is driven by money. It could be that you want to retire, you have suffered ill health, a key member of staff has just left, your business is struggling, your clients are leaving you. Your reasons for selling also affect the sale price.
Delivering consistent, high-quality placements is what sets a recruitment agency apart. Prioritising quality over quantity ensures lasting partnerships, higher client satisfaction, and stronger candidate matches. It’s about precision, not volume. #QualityOverQuantity #RecruitmentExcellence #ClientSuccess #StrategicHiring
There are so many different factors involved in every recruitment agency/business sale, but broadly speaking market valuations depend on the following list of factors. Recruitment Agency Sales article
For more detailed advice on safeguarding your recruitment fees, get in touch! Always happy to have a discussion. You can also use the Interim Lawyers Platform to get independent reviews of terms undertaken by experienced commercial contract solicitors from just £85 per hour.
Carefully consider the implications of approaching local competitors. Despite repeated advisories, many still believe it’s a viable strategy, only to have their time wasted and sensitive information exploited. Selling to a local competitor rarely achieves the desired outcome. If you have any questions about this article or are considering selling your recruitment agency, contact us at Recruitment Agency Sales for expert advice and support.