Nearly every recruitment agency owner dreams of one day selling their business and walking away with a life-changing sum of money.
However, only a small number can actually achieve this. Many agencies fail to prepare adequately for a sale, or they make mistakes that reduce the value of the business and make it less appealing to potential buyers.
The good news is that there are proven ways to increase the value of a recruitment agency:
BUILD A CONTRACT DESK
Most buyers want reassurance that the agency they are purchasing will generate revenue after the sale. The best way to demonstrate this is by having a contract desk.
An agency that only does permanent placements is essentially only as valuable as its last placement. By contrast, an agency with contractors who have 6–12 months remaining on their assignments provides buyers with guaranteed profit after completion of the sale.
This is also why agencies with a contract desk can achieve a valuation multiple 3–5 times higher than those focused solely on permanent recruitment.
DIRECTORS BECOME REDUNDANT
Most directors looking to sell have no interest in staying on once the business is sold as there is little motivation to make money for someone else.
Therefore, it’s crucial for directors to remove themselves from the day-to-day running of the agency, both from a sales and operational perspective. Demonstrating that the business can run independently increases its value, as buyers can factor the directors’ salaries back into the deal.
SECURE CLIENT PREFERRED SUPPLIER STATUS
Being on client Preferred Supplier Lists (PSLs), signed contracts, or exclusive agreements adds significant value. Buyers want to see that the business has strong client relationships and clear opportunities for future growth.
Well-managed client contracts give confidence that the revenue pipeline is stable and sustainable.
LOCKED IN KEY STAFF MEMBERS
No buyer wants to purchase a business only to see its key employees walk out the door on day one. That risk can drastically reduce value.
To protect against this, agency owners should ensure that essential staff are tied into the business, whether through EMI schemes, bonus structures, or other retention strategies. Continuity is a major factor in keeping buyers confident.
DEMONSTRATE FINANCIAL GROWTH
For any potential buyer, financial performance will be the first thing they examine. That means your accounts need to be watertight, up-to-date, and readily available when due diligence begins.
Both the Profit & Loss statement and the Balance Sheet should reflect consistent growth. If there are any dips, be prepared with a clear explanation to show they are anomalies and that the agency is on an upward trajectory.
All of these strategies are achievable but require forward planning. By preparing early, you can ensure your agency commands the right multiple and attracts serious buyers.
At MAYACHI, we support recruitment agencies that are planning an exit by reviewing their current and potential sale value. We have extensive experience in helping agencies through the selling process and have guided many to successful, profitable exits.