The wider deal economy continues to provide upbeat news, with transaction values reaching new post 2007 highs for a single quarter in Q1 2018. Are we seeing that level of activity reflected in the recruitment sector? In our view, yes, and we continue to see a good flow of deals completing.
In the most recent deal to close, Osborne Clarke provided transaction support to Phaidon International on its sale to Quilvest Private Equity, the private equity arm of the Quilvest group. Osborne Clarke have been long term advisers to Phaidon International, and advised on its previous transaction in 2016, backed by Muzinich & Co. The group identifies talent to place in the Science, Technology, Engineering and Mathematics (STEM) sectors.
The close of 2017 and start to 2018 have seen a number of other interesting deals for the Osborne Clarke team, and recent highlights include:
- advising The Adecco Group on its acquisition of CMAST, a Belgium based project management and consultancy business;
- advising Japanese listed company Trust Tech Inc on its acquisition of a 75% stake in the Gap Personnel Group;
- advising Netherlands based Calco Group BV on its MBO, backed by Inflexion Private Equity;
- advising the independent directors of Interquest Group plc on its defence of a takeover offer; and
- advising on the sale of Fleet Education Services Limited to private equity backed Education Personnel.
Matthew Bodfield, a corporate partner specialising in advising on Workforce Solutions sector M&A, comments: "It has been a busy period in the sector, and it shows no signs of stopping in the next few months. We are currently working on another 4 deals in a range of subsectors, and the mix of international acquirers and private equity money continues to drive the market. But buyers are looking hard at compliance: they are looking at GDPR readiness, and have an eye on tax risk via contracting models. A well advised seller will address these issues at the outset of any process. Whilst there may be a measure of concern for the medium term prospects of M&A, the near term continues to bode well for owners looking to realise the value they have built in their recruitment companies."
Kevin Barrow, a specialist Workforce Solutions sector lawyer, comments: "It's good to see this volume of deals. Looking forward, the impact of likely IR35 changes in 2019 may make buyers worry, but we doubt that this will affect investor appetite in the long run provided obvious compliance mistakes, and some of the newer aggressive tax avoidance schemes, are avoided. And there is good news: one thing that buyers have always worried about in the sector has been the tendency, straight after a deal, for key employees to leave and take candidate and client data to competitors. Post GDPR that should be harder for employees to do without suffering serious legal consequences, and this should significantly reduce deal risk for investors. So…GDPR is good news (assuming you are on top of it)!"
Osborne Clarke has a prominent Workforce Solutions sector practice, having acted on many of the leading corporate deals in the sector in recent years.