Gambit Corporate Finance LLP has published its Human Capital Market Review for H1 2022. This edition reaffirms the sector’s resilience, with average M&A deal values in H122 evidencing a further sustained rise to beyond pre-pandemic levels. The review also sets out the key focus areas that acquirors are prioritising when conducting their due diligence, illustrating the key considerations for Human Capital companies.
H1 2022 Report Summary
- Despite a correction in Q222 deal volumes, average deal values continued their sustained rise to beyond pre-pandemic levels in H122 reaffirming the resilience of the sector and acquiror appetite to undertake M&A in the current environment.
- Despite recessionary concerns, the Human Capital market has proven its resilience across all stages of the economic cycle , which is supporting sustained M&A activity, as evidenced by increasing average deal values in H122.
- H122 saw a rise in IT, HRO & RPO and Healthcare sub-sector transactions on the back of increased digitisation, legal and regulatory changes and sector specific candidate shortages.
- Despite a fall in cross-border transactions in H122, the favourable regulatory environment within the UK market relative to other jurisdictions continues to drive focus towards the UK for international acquirors looking to make cross-border acquisitions and establish a foothold in new markets that can augment growth.
- With UK job vacancies exceeding unemployment, acquirors continue to target recruitment firms with large candidate pools to leverage the growing number of vacancies in the UK hiring market.
- With anticipation of further BoE base rate rises to counteract inflation, Human Capital market participants are eager to undertake M&A activity now whilst capital availability remains high and the cost of debt remains relatively low.
- Current valuation metrics indicate that there is a window of opportunity for acquirors to undertake M&A while EV/EBITDA multiples are at a two-year low, whilst demonstrably strong and resilient Human Capital companies will continue to attract appetite and premium valuations.
- Human Capital firms that have successfully evidenced profitability throughout previous economic downturns will continue to attract appetite from strategic and financial acquirors.
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