How much is my recruitment agency worth?

Recruitment is one of the hardest SME sectors to value from the accounts alone. Turnover means very little, profit is highly sensitive to a handful of billers, and two agencies with identical net fee income can be worth double or half of each other depending on where that income comes from.

Start with net fee income, value on EBITDA

For a contract or temp desk, turnover includes contractor pay that never belonged to you. Net fee income (gross profit) is the honest measure of scale. Valuation itself works from normalised EBITDA — NFI less the true cost of running the business, including a market-rate salary for whoever manages it if the owner currently does that for free or for too much.

Typical UK outcomes fall in the region of 3x-6x normalised EBITDA, with owner-billing perm agencies at the bottom and diversified contract businesses with a management team at the top. See our sector multiples page for wider context.

What moves the multiple

Perm/contract mix. Contract NFI keeps arriving while placements run. A book weighted towards contract is worth more per pound of gross profit than one that resets to zero every month.
Consultant dependence. If the founder bills 40% of NFI, a buyer is buying a person. Value shifts into an earn-out or disappears entirely. A second tier of billers who own their client relationships is the single biggest value lever most owners can pull.
Client concentration. One client at 30%+ of gross profit invites a discount, particularly on PSL or framework arrangements that can be re-tendered.
Niche and margin. Specialist desks in supply-constrained skill areas hold fee rates and command better multiples than generalist volume recruitment competing on percentage.
Compliance and IR35. Buyers diligence status determinations, umbrella arrangements, right-to-work checks and any historic exposure. Unresolved IR35 or AWR risk comes off the price or into a warranty and indemnity.
Working capital and funding. Contract desks consume cash. Whether the business is invoice-financed, and on what terms, affects both the completion structure and what a buyer pays.
Data and systems. A well-maintained, GDPR-compliant CRM with documented candidate consent is an asset. A database that lives in consultants' inboxes is not.

Structure: the headline is rarely the price

Recruitment deals are structured around the risk that billers leave. It is common to see 50-70% paid at completion with the remainder over one to three years, tied to NFI or EBITDA targets. Two agencies can be "sold for £3m" and receive wildly different amounts. When you assess an offer, look at the completion payment, how the earn-out target is defined, who controls overheads and investment during the period, and what happens if a key consultant resigns for reasons outside your control.

Preparing an agency for a better figure

The work that raises value takes twelve to twenty-four months, not twelve weeks: move billing off the founder and onto a management team, deepen the contract book, spread client concentration, tighten restrictive covenants in consultant contracts, get compliance files in order, and produce monthly management information that shows NFI by consultant, by client and by desk. Buyers pay for evidence, and clean data is evidence.

Common questions

What multiple do UK recruitment agencies sell for?

Most profitable UK recruitment businesses transact somewhere around 3x-6x normalised EBITDA. Contract and temp-heavy agencies with sticky client relationships and a management team sit at the upper end; owner-billing permanent agencies dependent on one or two consultants sit at 2x-3x, and often only with a large proportion of the price deferred.

Is a recruitment agency valued on turnover or net fee income?

Neither directly — but net fee income (gross profit) is the meaningful revenue measure, not turnover. A contract desk billing £6m of turnover may only produce £900,000 of NFI once contractor pay is stripped out. Valuation works from normalised EBITDA, and NFI is the figure used to judge scale, margin and desk productivity.

How does perm versus contract mix change the value?

Contract and temp income is recurring while placements run, so it is valued more highly per pound of NFI than permanent fees, which have to be won again every month. A blended agency with 60%+ of NFI from contract typically attracts a higher multiple, provided the contractor book is diverse and the working capital funding is understood.

What reduces the value of a recruitment business most?

Consultant and client concentration. If the founder personally bills a large share of NFI, or one client is 30%+ of gross profit, a buyer prices in the risk that the value walks out after completion. Restrictive covenants, a documented candidate database, and a second tier of billers who own the relationships all materially raise the figure.

Will I have to accept an earn-out?

Very often. Recruitment deals commonly pay 50-70% at completion with the balance over one to three years against NFI or EBITDA targets. The headline number quoted by a broker is usually the maximum; what matters is the completion payment, how the targets are defined, and who controls costs during the earn-out period.

What does a recruitment agency valuation cost?

Our independent written valuation is a fixed fee, typically £495, delivered within 72 hours of receiving your accounts. We do not broker sales, so the figure carries no incentive to be flattering.

The Business Valuers provides independent, fixed-fee valuations for UK SMEs, including recruitment and staffing businesses. Ranges above are indicative market observations, not a valuation of any specific business.