M&A in the UK recruitment sector: Q4 2025
Early signs of recovery: deal volumes inch up and PE re-engages
10
deals completed
in Q4 2025
70%
of transactions were trade deals
20%
of deals were in the construction and engineering sector
Our view of the market
Deal activity in the UK recruitment sector picked up slightly in Q4 2025, with ten transactions completed, up from nine in Q3. Although deal volumes have not returned to their early 2024 highs, the increase from the previous quarter suggests that the market has bottomed out and is starting to rebound.
Reviewing activity across the year, Q1 2025 was the busiest quarter, followed by a sharp slowdown in Q2 which stabilised in Q3 and Q4. We expect market confidence to improve, following an extended period of uncertainty before last year’s Autumn Budget.
An improving outlook around fiscal policy, alongside signs of easing interest rate pressure, appears to be encouraging both buyers and sellers back to the table across sectors. Deal activity is expected to continue to build into Q1 2026. Buyers remain selective but appetite is returning for well-positioned businesses with recurring revenues, robust margins and strong management teams.
Number of deals
Recruitment deals by sector
Deal activity in Q4 was relatively evenly distributed across sectors, with no single sector dominating transaction volumes. Construction and engineering recruitment once again proved resilient, remaining one of the most active areas as infrastructure and skill shortages continue to underpin demand.
M&A in the technology recruitment sector also remained consistent, with at least one transaction every quarter in 2025. This underlines the sector’s ongoing attractiveness despite softness in broader technology hiring markets. Across the year, technology recruitment accounted for approximately 12% of all recruitment M&A activity, reflecting sustained buyer interest in specialist technology-focused agencies.
Spotlight on the technology sector
Technology recruitment continues to attract buyer interest, supported by long-term structural drivers rather than short-term hiring cycles.
- Demand for specialist skillsets in such areas as cyber security, data, cloud infrastructure and AI continues to outstrip supply, supporting pricing power and client stickiness for well-positioned agencies.
- From an M&A perspective, buyers are increasingly focused on niche technology recruiters with deep domain expertise, scalable delivery models and strong contractor books, rather than generalist technology platforms.
Consolidation in the technology recruitment sector is expected to continue, particularly as larger trade buyers and PE-backed platforms seek to acquire specialist capabilities aligned with long-term digital transformation trends. While near-term hiring volumes remain uneven, the sector’s strategic importance to clients underpins its continued appeal in the M&A market.
Deals by class
PE involvement increased in Q4, accounting for 30% of all completed transactions, up from 22% in Q3. This follows a period of more selective PE participation and suggests that financial sponsors are becoming more confident in the medium-term outlook for the sector.
Trade buyers continued to drive most activity, often pursuing bolt-on acquisitions to strengthen existing service lines, expand geographic reach or add specialist capabilities. For business owners, this reinforces the depth of strategic buyer appetite for high-quality recruitment assets, particularly those with scalable operating models.
Public market valuation multiples were broadly stable throughout Q4, even as M&A activity began to pick up across the sector. Mean EV/EBITDA multiples softened slightly to 8.78x, from 9.39x in Q3, while median multiples declined to 7.84x.This suggests that investors continue to view the recruitment sector cautiously against a backdrop of improving confidence in the wider public markets. The interquartile range narrowed modestly in Q4, indicating a reduction in valuation volatility. In practical terms, this suggests greater consistency in how the market is valuing recruitment companies, with fewer extreme outliers. For business owners, this points to a more predictable valuation environment compared with earlier in the year. For recruitment business owners considering a sale, strong valuations are achievable in the market for high-quality businesses with clear differentiation, specialist exposure and consistent earnings visibility.
Deal highlight
Tatton Recruitment Group acquired Simply Education and Healthii People from Auxo Group. Simply Education operates in education recruitment, supplying teaching and support staff to schools across the UK, while Healthii People is a healthcare recruitment specialist with operations in the UK and Australia.
The transactions reflect Auxo Group’s strategic refocus on STEM recruitment, where it has been concentrating investment and management attention. The divestments allow Auxo to streamline its portfolio, prioritise scale and depth within its core technical disciplines, and redeploy capital and operational resources towards growing its core platform.
For Tatton Recruitment Group, the acquisitions align with a buy-and-build strategy centred on acquiring specialist recruiters to broaden service capability and diversify revenue streams. Education and healthcare are characterised by skill shortages and structurally supported demand. Meanwhile, acquiring established operators allows Tatton to gain immediate access to experienced teams with deep sector and compliance expertise, rather than building capability organically. Healthii People’s Australian operations also introduce a cross-border element, providing geographic diversification and opportunity for future growth. More broadly, the transactions highlight ongoing consolidation within the recruitment sector, as groups seek to assemble multi-sector platforms through targeted acquisitions.
In summary
As the broader M&A market demonstrates increasing stability, the recruitment sector remains an attractive sector for investment. Strong interest from both private equity and strategic buyers continues to support robust valuations for firms with solid market positioning.
Reach out to Moore Kingston Smith’s specialist corporate finance team to discuss how you can maximise the value of your business and achieve your strategic objectives. Our experts are ready to guide you through every stage of the sale or investment process.
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.
