Trade deals and PE bolt-on activity defining solid recruitment M&A

M&A in the UK’s recruitment market is being shaped by a relatively even mix of trade and private equity bolt-on activity, with the sector continuing to see solid levels of dealmaking in spite of geopolitical uncertainty.

According to the latest Recruitment and workforce solutions sector: M&A activity update Q1 2026 from audit, tax and consulting services adviser RSM UK, there were 19 deals in the UK’s recruitment and broader workforce solutions market during Q1 2026.

This was up from 16 transactions in both Q3 and Q4 2025 and broadly consistent with the overall quarterly average for 2025. In the 12 months to the end of Q1 2026, there were 72 transactions in the sector, down slightly from 74 in the year to the end of Q4 2025.

Of the 19 transactions recorded during the first three months of the year, 47 per cent were trade deals, 32 per cent were add-on acquisitions by private equity-backed buyers and 10 per cent were new private equity platform acquisitions. Other transactions, such as Management Buyouts (MBOs), accounted for 11 per cent of the total.

The continuing prevalence of add-on deals in private equity activity was highlighted as one of the quarter’s key trends by RSM UK, with new platform activity described as remaining “highly selective”.

According to the report, the two private equity new platform deals completed in Q1 - US firm Southfield Capital’s $100 million acquisition of Metric Search and Stephenson Capital’s investment in HR consulting firm Realise HR - demonstrated “the greater appetite of US PE for businesses with sufficient US-market penetration and potential.”

There were six add-on acquisitions by PE-backed platforms during the first quarter, up from four in Q4, with RSM UK commenting that “[v]alue creation over a longer cycle to supplement organic growth continues to be a key theme.”

Notably, however, five of these six add-on deals were completed by recruitment industry-focused investment firm Meraki Capital through its Magnus Search platform. These deals were described as reflecting Magnus Search’s “long-term plan to scale its business by using established blue-collar focused staffing specialists in need of operational (or financial) support to boost their growth.”

The report noted that there was growing interest in UK firms from overseas buyers, with three deals, including the aforementioned US PE transactions and French-headquartered Groupe Adequat’s entry into the UK through the purchase of Solutions Driven.

There was also growth in overseas acquisitions by UK buyers, with another three deals, including Sheffield Haworth’s acquisition of Australian executive search business O’Leary and Partners, Adzuna’s acquisition of Spanish job search engine Trovit and Mitula and Red Global’s investment in American LRB Group.

In terms of sub-sector activity, the report found that there was strong activity involving executive search companies, with three major deals, including Southfield Capital’s acquisition of Metric Search, Groupe Adequat’s acquisition of Solutions Driven and Sheffield Haworth’s Australian acquisition of O’Leary & Partners.

The most active verticals, however, were engineering and construction, which accounted for more than half of the Q1 total, compared to just 19 per cent of activity in 2025. This was particularly boosted by Meraki Capital’s flurry of deals.

Meraki Capital’s acquisitions in this space were joined by an additional PE bolt-on deal (Capitol Meridian Partners’ investment in JMC Aviation via Launch Technical Workforce Solutions), the management buyout of Cast UK (the only MBO during Q1) and three trade acquisitions.

Noting a narrower spread of deals across sectors compared to previous periods, RSM UK also highlighted professional services, tech-led recruitment platforms and education as verticals that saw significant activity during Q1.

Looking ahead to the remainder of 2026 and beyond, RSM UK said that the recruitment sector was “starting to see more positive signs”, with several firms generating growth on leaner cost bases (particularly specialist companies operating in strong verticals, focusing on senior hires and with access to international markets).

According to RSM UK, there is “cautious optimism” these positive signs will be sustained over the coming months, despite ongoing global and geopolitical uncertainties.

However, the report noted the challenging economic environment UK businesses face and the persistent caution and selectivity of private equity firms as significant market headwinds. RSM UK adds that this may generate “a flight towards quality assets, particularly those with market profiles attractive to US PE, and business models which better align to premium hires, specialist niches and consulting, rather than pure staffing models.”

Reflecting on its own activities, RSM UK says that its deal services team is “seeing a stronger pipeline of sector opportunities”, adding that this is indicative of both the quality of the UK market, as well as the quantity of potential deals.

Amid ongoing buyer caution and the resulting rigour of due diligence, the report closes by emphasising that strong preparation for an exit is now more vital than ever.

While caution remains, many private equity investors are planning to increase their activity in 2026

The UK recently placed sixth in the global ranking of M&A attractiveness - Find out more about the factors influencing buyer interest in UK acquisitions

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