What Is Your Recruitment Agency Worth?
A recruitment agency valuation should consider much more than turnover or a headline industry multiple.
We provide specialist valuation reports for recruitment agency owners, directors, buyers and shareholders who need a realistic assessment of market value together with practical advice on saleability, exit strategy and the factors most likely to influence buyer interest.
Know Where You Stand Before You Make a Decision
There are many reasons to value a recruitment business. You may be considering a sale, planning retirement, restructuring ownership, buying out a shareholder or simply trying to understand what you have built.
A realistic market valuation can help you assess your options before you enter discussions with buyers or commit to a particular exit route.
It can also identify weaknesses that may affect value or saleability, giving you time to address them before the business is marketed.
Read our Recruitment Agency Exit Planning Guide →A valuation can help you:
- Understand a realistic market value range
- Plan a future sale or retirement
- Assess whether now is the right time to sell
- Prepare for discussions with prospective buyers
- Identify issues affecting saleability
- Consider ownership or structural changes
- Review a business you are considering buying
Why a Recruitment Agency Valuation Is More Than a Multiple
EBITDA and NFI multiples are useful valuation tools, but applying a headline multiple in isolation can give a misleading result.
Two recruitment agencies producing the same level of profit can have very different values.
A buyer may be willing to pay more for a business with recurring revenue, a broad client base, an established management team and limited dependence on the owner.
Conversely, a profitable agency may attract a lower valuation where revenue depends on one major client, the owner personally controls most important relationships or the business requires significant working capital.
The appropriate valuation therefore depends on the individual characteristics of the recruitment agency as well as current buyer demand.
What is EBITDA?
EBITDA stands for Earnings Before Interest, Tax, Depreciation and Amortisation. It is commonly used as one measure of operating performance when assessing business value.
Buyers may then adjust EBITDA to reflect unusual, personal or non-recurring income and costs.
Read our full guide to EBITDA →Factors We Consider When Valuing a Recruitment Agency
The weighting given to each factor will depend on the type of agency and the circumstances of the valuation.
Adjusted EBITDA
We consider the sustainable operating earnings of the business and the extent to which historic profits require normalisation.
Net Fee Income
Net fee income or gross profit can be particularly important in temporary and contract recruitment, where headline turnover may include significant worker or contractor costs.
Permanent, Temporary & Contract Mix
The structure of recruitment income can affect recurring revenue, working-capital requirements, risk and buyer appetite.
Client Concentration
A business heavily dependent on one or two clients may be viewed as carrying greater risk than an agency with a broad and diversified client base.
Recurring Revenue
Framework agreements, contractor books, retained assignments and repeat client requirements can provide greater visibility of future income.
Owner Dependence
We consider how much revenue, business development and operational management depend personally on the current owner.
Management Team
A capable management structure can increase transferability and reduce the need for a buyer to replace the owner’s role immediately.
Recruiter Strength & Retention
The experience, performance and stability of consultants and managers can be important to the future earnings of the agency.
Growth & Trading Trends
Buyers will consider whether earnings and NFI are growing, stable or declining and whether current performance appears sustainable.
Sector Specialism
Buyer demand can vary significantly between healthcare, education, technology, executive search, engineering and other recruitment niches.
Working Capital
Temporary recruitment businesses can require substantial funding where workers are paid before customers settle invoices.
Current Buyer Demand
Ultimately, market value is influenced by what suitable buyers are willing to pay for a business with the particular characteristics of your agency.
Turnover and Net Fee Income Are Not the Same Thing
This distinction is particularly important when valuing recruitment businesses.
In permanent recruitment, turnover may broadly reflect the fees retained by the agency. In temporary and contract recruitment, however, turnover can include large sums that are subsequently paid to workers or contractors.
Net fee income or gross profit can therefore provide a much clearer indication of the economic activity retained by the recruitment agency.
This is one reason why comparing recruitment businesses purely by turnover can produce misleading conclusions.
Example
A temporary recruitment agency may report several million pounds of turnover while retaining only a proportion of that amount as net fee income after worker costs.
A permanent recruitment agency with much lower turnover could potentially generate a similar or even higher level of EBITDA.
The two businesses should therefore not be valued simply by comparing headline revenue.
What Does a Recruitment Agency Valuation Report Include?
Our reports are prepared on a bespoke basis according to the business, purpose of the valuation and complexity of the circumstances.
Business Overview
Review of the agency, its history, sector, services, structure and ownership.
Financial Analysis
Consideration of turnover, NFI or gross profit, operating performance and sustainable earnings.
Adjusted EBITDA
Review of appropriate adjustments and the likely maintainable profitability of the business.
Commercial Risk Factors
Assessment of client concentration, owner dependence, management, staff and other issues that may affect buyer appetite.
Market Evidence
Where available and relevant, consideration of comparable transactions or market evidence involving businesses of a similar type and size.
Market Value Range
Our opinion of the likely open-market value or realistic range in the circumstances considered.
Saleability
Practical assessment of factors likely to help or hinder the sale of the recruitment agency.
Exit Strategy
Recommendations relevant to the owner’s objectives, timetable and likely buyer market.
Who Uses Our Recruitment Agency Valuation Service?
Agency Owners Considering a Sale
Understand likely value before deciding whether and when to put the business on the market.
Owners Planning Retirement
Assess the current position and identify steps that may improve transferability before exit.
Shareholders & Directors
Obtain an independent view when considering ownership changes, share transfers or internal restructuring.
Prospective Buyers
Obtain an independent perspective on the value of a recruitment agency you are considering acquiring.
Partners or Management Teams
Support discussions involving succession, management buyouts or changes in ownership.
Recruitment Businesses of Different Sizes
We consider recruitment businesses ranging from small owner-managed agencies to larger and more complex operations.
How Our Recruitment Agency Valuation Process Works
Initial Discussion
We discuss the agency, why you need the valuation and how you intend to use the report.
Information Gathering
We request relevant financial and commercial information needed to understand the business.
Analysis
We review financial performance, NFI, EBITDA, structure, risks, strengths and relevant market evidence.
Valuation Report
We prepare a bespoke written report explaining our assessment and the reasoning behind it.
Recommendations
Where appropriate, we identify practical steps that may improve saleability or support an exit strategy.
Next Steps
If you decide to sell, we can discuss our confidential recruitment agency brokerage service.
What Happens If You Decide to Put the Agency on the Market?
A valuation does not commit you to selling the business.
If you do decide to proceed, Recruitment Agency Sales can prepare an anonymous business profile, approach suitable registered buyers and coordinate introductions, meetings and offers.
Under our standard brokerage model, sellers do not pay us an introduction or completion fee. Valuation and other professional advisory work are separately chargeable.
Find out how we sell recruitment agencies →Planning ahead?
If your intended sale is still several years away, our exit planning guide explains some of the issues worth addressing before you approach buyers.
Read the Exit Planning GuideWhat Business Owners Say About Our Valuation Reports
“Thank you for your report … most illuminating and giving much food for thought.”
Business Owner, July 2022
“Thank you for your report – most enlightening!”
Business Owner, April 2023
“Thank you for a very comprehensive report which we have found very useful.”
Business Owner, January 2024
Recruitment Agency Valuation FAQs
How is a recruitment agency valued?
Recruitment agency valuations commonly consider sustainable earnings such as adjusted EBITDA alongside net fee income, revenue mix, client concentration, management structure, owner dependence, recurring revenue, sector specialism and current buyer demand.
What multiple is a recruitment agency worth?
There is no single multiple that applies to every recruitment agency. Multiples vary according to profitability, growth, risk, sector, client concentration, management strength and market demand. A headline multiple should therefore be considered as part of a wider valuation rather than used alone.
Is recruitment agency turnover important?
Yes, but turnover can be misleading if considered alone. In temporary and contract recruitment, turnover can include significant worker or contractor costs, making net fee income or gross profit particularly important when assessing performance.
Do I need a valuation before selling my recruitment agency?
It is not compulsory, but a valuation can provide a realistic benchmark before you begin negotiations with buyers and help identify issues worth addressing before the business is marketed.
Can you value a recruitment agency for a buyer?
Yes. Independent valuation work can also assist prospective buyers who want a separate assessment of a recruitment business they are considering acquiring.
Does a valuation guarantee the eventual sale price?
No. A valuation is an opinion based on the information available, market evidence and circumstances at a particular time. The actual price will ultimately depend on buyer interest, negotiations, due diligence and the agreed deal structure.
Useful Recruitment M&A Resources
Request a Recruitment Agency Valuation
Tell us a little about your recruitment business and why you require a valuation. We can then discuss the information required, likely scope and cost in confidence.
How do I request a quote for a valuation?
Complete the form below or contact us.