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 (lets take the easier definition of net fee income – ie your turnover figure).

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 20 staff, it may have 2 members of staff. There may be 3 clients, there may also be 400 clients. Your database may contain 50 contractors, or you may have built up a bank of 3,000.

At the end of the day, your recruitment agency is worth what a buyer will pay for it, and 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. Its common sense, although unfortunately this can go out of the window when agency owners start applying accountancy multiples that are mostly pie in the sky.

Your agency is a service business. You have no assets to sell, you have the professional capability of your staff and yourself to offer a buyer. What a buyer is prepared to pay for that capability 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.