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Human Capital M&A Review Q2 2018

25 September 2018

Gambit Corporate Finance LLP announces the publication of its Human Capital M&A Market Review for Q2 2018

Executive Summary

  • Human capital public interest company valuations declined slightly in Q218. This was more due to specific concerns with certain staffing businesses than a sector wide issue. In order to boost valuations and enhance earnings, listed acquirers continue to seek accretive acquisitions which will support strong valuation multiples for high quality assets
  • The volume of global Human Capital transactions fell slightly in Q218, however, the market is still suffering from a shortage of sellers and it is expected that transactions will increase over the coming quarters as political and economic uncertainties stabilise
  • UK transaction volumes remained steady in Q218. A shortage of sellers continues to hold back deal volume and drive valuations higher as both strategic and financial buyers are competing over a limited number of deals
  • Political risks remain in the UK, with little clarity on both the UK’s future trading relationship with the EU and the impact of Brexit on the free movement of people which may significantly impact candidate availability in a number of sectors
  • Unemployment levels within the UK remain close to record lows and are likely to remain low for the time being as the economy continues to grow slightly ahead of forecast levels
  • With a shortage of available talent, companies are struggling to recruit enough skilled and qualified permanent candidates, and are becoming increasingly reliant on temporary staff.  This is boosting fee income and also enhancing appetite for value enhancing acquisitions in the space
  • The Gambit HC index shows that valuations dipped for the second quarter in succession in Q218 with an average valuation of 9.2x EBITDA. This is at odds with the strong recruitment fundamentals and a positive outlook, therefore we expect that market ratings and valuations will show signs of improvement in the coming months

To read the full report click here