Human Capital – 2021 M&A Outlook

Gambit’s Human Capital team is pleased to publish its 2021 M&A Outlook report for the sector, which details the key trends that both acquirers and sellers can expect in the year ahead. It also sets out a number of key considerations for Human Capital companies, outlining where future opportunities may be.

To view the full report click here.

Key points :

  • With buoyancy returning to the share prices of listed recruiters, the defensive strategies observed in 2020 will shift towards the prioritisation of growth, with M&A set to play a pivotal role in strategic initiatives in 2021.
  • With private equity buy out activity at its highest level since the 2008 financial crisis, deal volumes and values in the sector will be further enhanced in 2021, with Human Capital companies attracting significant appetite.
  • To protect market positions in the medium term, recruiters will need to acquire new sector specialisms and add to tech-enabled solutions as the market diverges into large global groups and agile niche sector specialists.
  • Strategic M&A activity in 2021 will be closely tied to the post-pandemic structural trends that have been crystalised over the course of 2020, such as increased digitisation and the decentralisation of economic activity.
  • The potential for changes to Capital Gains Tax will lead to an acceleration of sellers in the market, creating a value maximisation opportunity for sellers to benefit from tax relief and buyers to capitalise on a rise in available assets.
  • Deal makers have become adept at completing transactions in the current environment, with effective negotiation of Covid-19 adjustments paving the way for optimal value realisation opportunities.
  • Whilst an increase in distressed transaction activity did not materialise in 2020 given the myriad of government support measures, a more opportunistic M&A market is expected in 2021 as key schemes are wound down.
  • We expect well-prepared acquirers with strongly capitalised balance sheets to seize the opportunity to engage with the M&A market and take advantage of market dislocations and a rise in distressed domestic activity.

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