M&A in the UK recruitment sector: Q3 2025
Market steady ahead of key UK Budget announcement
9
deals completed
in Q3 2025
78%
of transactions were trade deals
22%
of deals were in the education sector
Our view of the market
Deal activity in the UK recruitment sector remained flat in Q3 2025 with nine transactions completed, matching Q2 levels and signalling a stabilisation in deal volumes after four consecutive quarters of decline. This represents a 40% year-on-year reduction compared to Q3 2024 , as the market continues to adjust to tighter financing conditions and subdued business confidence. While the pace of transactions has slowed compared to the highs of 2023, activity remains underpinned by resilient demand for skilled labour and ongoing consolidation among trade buyers.
Investor sentiment remains cautious ahead of the Autumn Budget, with uncertainty around taxation and employment policy delaying decision-making. That said, conversations in the market remain active and both trade and private equity buyers continue to assess opportunities, particularly in specialist sectors where demand and margins remain strong.
Deal activity is expected to remain relatively steady in Q4, with some buyers seeking to complete transactions before Budget announcements, followed by the traditional year-end slowdown post-Budget in December.
Recruitment deals by sector
Deal activity was evenly distributed across sectors, with no single area dominating. Construction & engineering continued to attract steady buyer interest, while education emerged as a key focus area, particularly for private equity investors.
Spotlight on the education sector
- Private equity interest in the education sector has been particularly strong this quarter, with all completed deals involving private equity investors, split evenly between bolt-on and platform investments.
- Recent updates to immigration rules are enabling schools and public institutions to access international teaching talent more efficiently, driving demand for recruitment firms with international reach.
- Persistent teacher shortages continue to drive strong hiring activity across core subjects, maintaining the long-term need for more specialist education recruiters.
- The Department of Education’s decision to reduce certain teacher training bursaries has led to short-term pressure on supply, reinforcing the value of experienced agencies in sourcing and retaining qualified staff.
- Consistent public sector funding and predictable client relationships are making education recruitment businesses increasingly appealing to both trade and private equity buyers seeking resilience amid wider market uncertainty.
Deals by sector
Deals by class
Private equity interest remained steady at 22%, consistent with both the previous quarter and the twelve-month average. Private equity buyers remain highly selective, focusing on sectors demonstrating strong fundamentals and predictable earnings, most notably within the education sector this quarter.
Trade buyers continue to drive the majority of transactions, often pursuing bolt-on acquisitions to strengthen existing service lines or expand geographic reach. For example, Gattaca’s acquisition of InfoSec People in August 2025 to bolster its cybersecurity arm. For recruitment business owners, this highlights the continued appetite from trade buyers for well-run specialist agencies with scalable models.
Listed company valuation multiples
Q3 EV/EBITDA multiples softened slightly compared to the previous quarter, with the mean declining to 9.39x from 10.63x in Q2, a figure previously elevated by a single outlier at the upper end of the market as noted in our Q2 report.
The interquartile range widened modestly, reflecting increased variation in investor sentiment following a period of relative consistency earlier in the year. While overall valuations remain within their twelve-month range, the moderation in mean multiples suggests a more cautious outlook among investors, particularly ahead of the Autumn Budget.
For business owners considering a sale, this suggests buyers continue to show pricing discipline, with stronger valuations reserved for firms demonstrating clear differentiation and consistent earnings.
Deal highlight
In September 2025, THI Investments announced the acquisition of Empowering Learning, a specialist education recruitment business with reported revenues of around £60 million in 2024.
The deal underscores private equity’s growing interest in the education sector, where stable public funding, predictable demand and recurring client relationships provide resilience amid wider market uncertainty. Empowering Learning supplies teachers, teaching assistants and support staff across primary, secondary and special education settings nationwide, positioning it as a strong platform for future expansion.
For THI Investments, the acquisition represents a strategic move to build scale within one of the UK’s most stable recruitment sectors. The firm is expected to pursue a buy-and-build strategy, targeting complementary regional and subject-specialist agencies to expand coverage and service depth. This transaction reflects the broader trend of private equity investors seeking exposure to noncyclical, skills based sectors that continue to perform despite wider market headwinds.
Methodology
The data of this report has been sourced from Pitchbook and only includes deals where the acquisition target is UK based.
Please reach out directly for further information about the findings of this report or its methodology.
