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Human Capital M&A Market Review Q1 2019

09 May 2019

Gambit Corporate Finance announces the publication of its Human Capital M&A Market Review for Q1 2019.

In Summary:

  • The volume of global human capital transactions increased by 10% in Q119, due to increasing activity in North America, the Middle East and Asia.
  • European deal volumes declined because of continued political uncertainty. The decline in deal volumes was, in part, expected as Brexit was timetabled to occur at the end of Q119. Senior management resource has been focused on “no deal” preparations rather than value and growth enhancing strategies or acquisitions.
  • Whilst Brexit has continued to cause uncertainty, with little progress being made, the “flextension” means that a “no deal” exit has been avoided at least for the near term. This may be a positive, as it will allow for further negotiations on key factors which impact the recruitment industry such as the free movement of people and right to work criteria in both the EU and the UK.
  • UK unemployment continues to fall and currently stands at 3.9%. With the economy operating at close to full employment and increasing demand for staff from the majority of sectors, the outlook for the human capital sector remains strong.
  • Globally cross-border activity increased in Q119, as a result of further activity within Central Europe and the Benelux regions.
  • A shortage of skilled and qualified candidates in several sectors such as engineering has driven increased deal volumes. It is likely that other sectors struggling with candidate availability such as healthcare and IT will see a marked increase in deal volumes in the near term driven by further competition between strategic and financial acquirers looking to gain access to high quality candidate pools.
  • The Gambit HC index shows that valuations for public interest companies increased in Q119. Whilst there is some way to go before they recover to previous highs, institutional shareholders continue to put pressure on boards to enhance market ratings at a quicker pace than is currently being achieved.
  • We anticipate public interest companies will take advantage of the continuing low cost of capital and appease shareholder pressure to address the valuation erosion suffered in Q418, by making earnings and value enhancing acquisitions.

To read the full report click here