The right time to plan your exit strategy is all down to your own personal and business circumstances.

It is important, however, to understand the value of your business to others, not just to yourself.
Of course, the best time for you may not be the best time overall and we believe it is imperative to take advantage when the market is in your favour.

The following seven reasons show why there has never been a better time to sell your business:

  • The Government’s actions

    The new Conservative government have previously taken certain steps in order to reduce the budget deficit. The clarification of corporate tax policy has created a better stage for M&A activity as it is seen to provide greater stability for businesses.

  • Buyers looking to diversify

    Buyers have recently been acquiring businesses from other sectors in order to diversify, especially over the last two years. This is also apparent within the recruitment sector, with companies aiming to enter into new or emerging markets.

  • Strategic acquirers

    Due to the current climate, buyers are looking to strategically invest in companies that show valid opportunities to increase market share. These types of transactions are seeing an increase above the current market level of multiples.

  • Wealthy companies

    Large numbers of cash-rich companies that have experienced recent success, retaining profits during the recession, have funds to invest in new acquisitions. Many have acquisition budgets already in place to fund new projects, which creates a sellers’ market.

  • Overseas buyers

    The current weakness of sterling and the decrease in interest rates has resulted in assets within the UK being acquired by international buyers. At Recruitment Mergers we have seen an increased demand for the acquisition of UK-based companies, particularly from the US and Europe.

  • Minimised taxation (Entrepreneurial Relief)

    A key reason why business owners are looking to sell is Entrepreneurial Relief. Sellers are now only being taxed 10% of any proceeds up to £10m, compared with the 40% rate seen in previous years. With the Conservative government being elected for another term we expect this to remain at current levels.

  • Deal scarcity

    A decrease in larger deals means that the more sizeable companies have moved focus to the mid-market. Companies that show strong financial performance have gained an increase in interest from many of our clients and other business owners. Now is the time to gain maximum value for your company.



These steps detail the various stages throughout the selling process and how long each stage is likely to take. Every transaction is different and whilst we do our best to stick to the timescales outlined (which from experience are fairly accurate) all are subject to change.

Some stages will overlap but the general rule is that certain processes need to be completed in order to progress with completing the transaction. A senior adviser will be able to discuss what’s involved in the entire process.

Your appointed consultant will also utilise Recruitment Mergers’ marketing and telesales team throughout the process.

This is all done on a confidential basis by highly trained M&A professionals.

  • Immediate

    Appointment of Senior M&A Consultant to lead the project and be your point of contact throughout terms signed, seller registration and invoice paid

  • Within 24 hours

    Provide you with a draft teaser document for your approval

  • Within 48 hours

    Release the approved teaser document to five-hundred trade buyers

  • Week 1

    Collate buyer questions for you to advise on

  • Weeks 1–4

    Present you with a list of buyers who are interested in meeting you

  • Month 1–2

    Agree with you a period of two weeks during which you would be available to meet with a selection of buyers

  • Month 2–3

    Arrange a set of second-round meetings with between three and five buyers (we should have an indication of where their bid will be by this point)

  • Month 3–4

    Meet and discuss buyers and bids and work on negotiating the price and terms of a deal to suit you

  • Month 4–5

    Select the favourite buyer and arrange LOI and contract to be sent for review

  • Month 5–6

    Acceptance or negotiation of terms; due diligence

  • Month 6–9

    Exchange of money and commencement of transfer


Accountants are usually the first port of call when owners wish to get an idea of the value of their company.


Whilst this may employ many technical methods of valuation the reality is that a company is only worth what the market is prepared to pay for it. Different buyers will value a target company in all manner of different ways and no two offers will be the same. This creates competition which Recruitment Mergers utilises to maximise
the price achieved.

Recruitment Mergers are seeing an average valuation based on 4–6x adjusted EBITDA for recruitment companies in the current market. There are a number of key factors which we find affect overall valuations and they are as follows:

  • Quality of the customer base:
    spread of clients / percentage of turnover/GP
  • Opportunity for profitable growth
  • Sustainability of earnings / quality of profits
  • Skills of the management and staff
  • Succession plan in place following the owner’s exit
  • Ease of integration and synergy with the buyer
  • Proven track record: history of profits, previous
    growth and winning new business
  • Positive balance sheet / working capital and cash reserves

There is no strict rule when it comes to how a buyer values a business or how they structure an offer but the following formula is a good indication.

Remember: Ultimately a company is worth what the market is prepared to pay for it.

Agreed adjusted EBITDA £
x agreed multiple
+ net balance sheet value
+ additional assets
= Total estimated value


In order to source a range of genuine, relevant buyers there is no substitute for the niche industry specialism Recruitment Mergers are able to provide.

Working exclusively within the recruitment sector we have unparalleled knowledge of the market and are in the best possible position to find buyers for your company.

Our comprehensive client list and contact database utilised within our marketing process generates potential targets through a combination of the following:

  • Desktop review
  • Sector expertise
  • Discrete enquiries to our
    vast network of contacts
  • Market news

Buyers are researched in terms of their relevance to the opportunity, appetite for the acquisition and financial position. Buyers are sourced from these categories:

  • Strategic buyer
  • Direct competitor
  • Overseas investor
  • MBO or MBI
  • Private individual

selecting buyers

Direct competitor

  • Understanding the vertical
    or specialism handled
  • Easy to identify
  • Increased synergy
  • Confidentiality is key

Overseas buyer

  • Fewer preconceptions of seller
  • Legal/cultural issues
  • No UK presence; cross sale
  • Currency exchange rates
    between countries

Private equity

  • Beneficial to non-retirement sales
  • Capital for growth; remove risk
  • Management team to remain
  • Normally look at companies
    with EBITDA of £2m or more

Strategic/synergistic buyer

  • Confidentiality still of importance
  • Complementary synergies
  • Management capability is more important
  • Matching corporate culture


  • Maintains confidentiality
  • Requires strong, well-funded management team
  • External funding issues
  • Reporting/controls post-acquisition

Private individual

  • No company infrastructure
    to provide synergy
  • Personal guarantees required
  • Quick decisions with less red tape
  • Strategic input


There is a variety of different ways to structure a company acquisition and no two M&A deals are the same. Here are a few examples of the deal structures we tend to see.

Earn outs

This is by far the most common deal structure we see within the recruitment industry. The majority of recruitment business is non-contractual and is reliant on the service provided by that company and its staff, in addition to rates and prices.

As a result there is an increased risk when acquiring a company within this sector, which is reflected in an increased desire to retain the owner(s) for a period of time before they leave completely. The most effective way of balancing this is through a deal consisting of an initial percentage paid up front followed by scheduled (usually performance-related) payments over an agreed number of months or years.

Deferred payments

Similar to an earn out structure, deferred payments are paid out again over an agreed number of months or years. However, unlike payments linked with the performance of a company (usually the bottom line profit figure) they are predetermined amounts paid on a deferred basis. Deferred payments are often financed via a loan or are paid out of future profits of the acquired company.

Elevator deals

These types of deals are more relevant to owners looking to stay within the business after it is sold, cashing in some of the current value of the business whilst retaining a level of equity. Such deals provide a vehicle for expanding future growth prospects through increased funding. This is often suitable for businesses during the early stages of growth, younger sellers, entrepreneurs and enterprises.


Essentially this is a deal with the full purchase price being paid on completion. This allows the seller to leave immediately and hand full control over to the buyer. A good option when retiring but one which is very rarely, if ever, seen within the recruitment industry.


This is a deal where two or more companies combine to form a new, separate entity in which there is usually an equity split between the relative owners. Mergers can sometimes simply occur with two or more companies bringing their business together with one ‘acquiring’ the other but with both or all parties’ owners staying on.