Independent business valuation · Recruitment

You've Had an Offer for Your Recruitment Business. Is It Fair?

The offer letter is built on your fee income and a debtor book you have probably funded with invoice finance. It will not say how much of the headline reaches you once the facility is repaid and the earn-out has played out. An independent valuation shows you that in two working days, before you reply.

Owners of recruitment agencies tend to reach us after something has already happened. A staffing group has written asking for a conversation. A private equity-backed buy-and-build has sent heads of terms with half the price deferred. Two senior consultants want to buy you out. Or a co-founder wants to leave and nobody can agree what their shares are worth.

Each of those parties has a number in mind and a reason for it. You are the one person at the table who has never had the business valued by someone with nothing riding on the answer.

Email Mark for a free discovery call See what a valuation report contains

The stakes

What finding out late costs

An illustrative contract and permanent recruitment agency with £22.0m turnover, net fee income of £4.2m and reported EBITDA of £1.25m. The owner had been told recruitment businesses sell for six times EBITDA and expected £7.5m. The company and every figure are fictional.

Illustrative figures, £000
Reported EBITDA	1,250
Holiday pay accrued for temps but not provided in the accounts	(80)
Provision for perm fees still inside their rebate period	(40)
Market-rate director costed in to replace the owner's own billing desk	(90)
One-off employment tribunal costs added back	35
Maintainable EBITDA	1,075
Enterprise value at an illustrative 5.0 times	5,375
Cash at completion	400
Invoice finance drawn against the debtor book	(1,450)
HMRC time-to-pay arrangement on PAYE arrears	(150)
Accrued temp holiday pay settled at completion	(110)
Working capital below the normal level	(95)
Equity value to the owner	3,970

The largest single deduction between £7.5m and £4.0m was the invoice finance facility. It funded the contractor payroll every week, so the owner thought of it as part of trading. A buyer paying a cash-free, debt-free price treats it as debt and takes it off the price. On top of that, the buyer would have deferred part of the £4.0m against an earn-out. The 5.0 times multiple is for illustration only. In a real valuation the multiple comes from your own agency's evidence, such as how long contractors stay on assignment and how far fee income leans on a few desks, tested against comparable recruitment deals.

The numbers you have been given

Who told you what your agency is worth, and what do they gain from it?

Nearly every figure an agency owner hears before a sale comes from someone who is paid, one way or another, by where it lands.

The buyer

has usually bought agencies before, and its own consultants may have competed with yours for the same clients, so it often knows better than you which billers the fee income rests on. It wants your contract book for as little up front as you will accept, and it knows where an earn-out protects it and which deductions, such as unprovided temp holiday pay, you have not thought about.

A broker

pitching for your instruction has a reason to quote high, often as a multiple of turnover that is mostly contractor pay passing straight through, or of gross profit no buyer has agreed to. The real number turns up months later, once due diligence has reached your umbrella company checks and your consultants' covenants.

Your accountant

knows your accounts and your PAYE position well, but may never have watched a buyer's accountants unpick a weekly contractor payroll, or negotiated an earn-out measured on named desks.

None of them is acting in bad faith. Each is answering a different question from yours, which is what your net fee income is worth to a buyer today and how much of it you will see once the facility is repaid and the earn-out has run.

Independence

Why our valuation is independent

When we value your agency, we have no reason to push the number up or down. The fee is fixed and agreed before any work starts, and it stays the same whatever the number turns out to be. You are not signing up to a sale, and nothing in the engagement commits you to anything further.

The report is yours. Show it to a buyer, your invoice finance provider, your accountant or a departing shareholder. Every figure in it traces back to one of three valuation methods, with each adjustment explained in the Excel model you receive alongside it.

Owners rarely go on to ask us to sell their business after a valuation, although it has happened. Most come to us for the reason this page exists. They want a number they can trust before someone else tells them what it is.

Who does the work

Who does the work, and what a valuation finds

Mark Ross Roberts FMVA CBCA carries out every valuation himself, with 30 years on the deal side of UK mid-market transactions. The largest corporate group he has negotiated against had a turnover of £3.2bn.

96%
In 96% of completed Achieve mandates, the price agreed at heads of terms is the price paid at completion.
Source: Achieve Corporation mandate records

The two summaries below show the kind of finding a valuation produces. They are examples written for this page, not records of real mandates, and they carry that label on the website until real anonymised deals replace them.

Illustrative example

Engineering and technical contract recruitment, Yorkshire

Turnover: £20m
Buyer: A private equity-backed staffing group
What the valuation found: Most of the agency's contractors were paid through umbrella companies chosen by the contractors themselves, with no checks on file. Since April 2026 that exposes the agency to the umbrella's unpaid PAYE. The buyer's draft heads of terms answered the risk with a large retention. The valuation quantified the exposure on actual payroll volumes, and the owner moved contractors to a vetted list with evidence of the checks before negotiating.
Outcome: The retention was cut to a level the owner could live with.

Illustrative example

Permanent recruitment for accountancy and finance roles, London

Turnover: £5m
Buyer: A larger multi-sector recruitment group
What the valuation found: Two consultants produced most of the net fee income. Their restrictive covenants dated from the year they joined, as juniors, and were drafted so broadly that a buyer's lawyers would doubt they could be enforced. The offer put most of the price into an earn-out measured on those two desks. The valuation showed the owner how much of the price depended on people he could not bind.
Outcome: The owner put new contracts and a retention plan in place for both consultants, then negotiated more of the price at completion.

Sector insight

What buyers pay for in a recruitment agency

Buyers of recruitment businesses pay for net fee income they can see continuing after the owner has gone. Turnover tells them very little, because most of a temp agency's turnover is contractor pay passed straight through.

A contract book that renews itself. Contractors on long assignments generate margin every week without a new placement being made. Buyers usually treat that income as more dependable than permanent fees, which have to be won again each month. How much more depends on contractor tenure and how many clients the book is spread across.
Client relationships held by the business. Direct relationships with hiring managers and repeat orders across several sites are worth more than a place on a preferred supplier list that is re-tendered every two or three years.
Consultants who will still be there in two years. Long-serving billers with a manager between them and the owner hold their value. So do employment contracts whose restrictive covenants a court would uphold, and buyers read every one before agreeing how much to pay up front.
A compliance file that survives an audit. Buyers want a status determination statement behind every contractor working through a limited company, and evidence that temps reached equal pay after twelve weeks in the same role under the Agency Workers Regulations. Since 6 April 2026 the checks on umbrella companies in the payroll chain have carried real money as well.
A niche the generalists cannot reach. Specialist sectors with scarce candidates, such as nuclear, rail or regulated healthcare roles, give an agency pricing power that a high-volume industrial desk does not have.

What pulls the value down

The discounts buyers apply to recruitment agencies are well rehearsed. Each one traces back to a deal where the earnings walked out of the door after completion.

Fee income concentrated in a few billers. When a small number of consultants produce most of the net fee income, the buyer assumes their clients and candidates leave with them. The usual answer is to move price into an earn-out measured on those desks.
Restrictive covenants that will not hold. Covenants copied from a template, with periods and geographies wider than the role justifies, may not be enforced. A buyer's lawyers read every consultant's contract and price the ones they doubt.
Dependence on a managed service provider. Work supplied as a second-tier agency through an MSP or RPO contract carries thin margin and no direct client relationship. The buyer values it as revenue that can be re-tendered away.
Contractor tax risk. Unclear IR35 status determinations, or contractors paid through umbrella companies nobody has checked, become a specific indemnity or a retention. Since 6 April 2026, the agency can be held jointly and severally liable for PAYE that an umbrella company in its chain fails to pay (Finance Act 2026, section 24).
A payroll the business cannot fund without the facility. Contractors are paid weekly while clients pay on 30 to 60 day terms or later. Growth soaks up cash, and the invoice finance that bridges the gap comes off the price as debt.

Most of these can be fixed, or at least evidenced, given twelve months, for example by redrafting covenants and putting umbrella checks on file. A valuation done early shows which ones apply to your agency and roughly what each is costing you in price.

Method

How we value a recruitment agency, and why the multiple comes last

Any agency owner can take last year's EBITDA and multiply it by a number a competitor mentioned after selling, or one a broker dropped into a pitch email. A buyer's advisers will price your agency from net fee income by desk and contractor tenure, and so do we. We set the multiple last, as the result of the work below. No two agencies share the same billers, clients and contractor book, so it differs every time, and we do not publish a typical range.

Before any multiple goes near your net fee income, we test the agency on:

Its defensible moat. What stops a client from hiring direct, or a rival agency from taking the account? Exclusive or retained terms, a candidate database the agency owns, specialist knowledge of a scarce talent pool and how deep the client relationship runs below the owner.
The market around it. A PESTLE review of the pressures on the sectors it recruits into: employment tax changes such as the umbrella company rules, hiring freezes in the client base, artificial intelligence in screening, and demand for contract labour. UK vacancies stood at 702,000 in June to August 2026, 10.9% below their pre-pandemic level (ONS, Jobs and vacancies in the UK, September 2026). Agencies reported permanent placements rising in September 2026 at the strongest pace in four years, from a weak base (KPMG and REC, Report on Jobs, October 2026).
Its competitive position. Porter's Five Forces applied to the agency itself: the buying power of large clients and MSPs that set margins, the power of scarce contractors to move for a better rate, low barriers to new agencies, substitutes such as in-house talent teams and job platforms, and rivalry on the same preferred supplier lists.
Its real competitive edge. The specific reason clients use this agency, and whether that reason survives the owner and the top billers stepping back.
Capital expenditure and investment. Recruitment needs little plant. The spend that matters is on the CRM and candidate database, the job board and compliance software, and the cost of hiring and training consultants to replace those who leave.
Frameworks and contracts. Preferred supplier agreements, public sector frameworks and MSP contracts, when each is due for re-tender, and how much of next year's net fee income they already cover.
Quality of earnings. Whether profit in the years before a sale was flattered by unprovided holiday pay, perm fees booked before their guarantee period ended, or a freeze on consultant hiring and training that will need reversing after completion.

Only then do we value the agency three ways: on maintainable earnings, on a discounted cash flow of its own forecast including the extra contractor payroll that growth has to fund, and on the net value of its assets. An agency owns little beyond its debtor book and its candidate database, so net assets usually sit well below the other two. Where the three disagree shows how much of the price rests on consultants and client relationships, and that is where a buyer will push.

On published multiples. BDO's Private Company Price Index put the median UK trade buyer multiple at 9.8 times EBITDA in Q3 2024, and 12.2 times for private equity (BDO, PCPI Q3 2024). Over the previous four years, the trade deals behind that index averaged an enterprise value of £14.5m (BDO, PCPI Q1 2024). Those deals span every sector, and few of the businesses behind them had turnover made up mostly of contractor pay, so the multiples sit on earnings that look nothing like an agency's net fee income. We treat them as one cross-check on the result of the work above and give them no more weight than that.

We value businesses up to £450m enterprise value. The fixed fees below cover businesses with turnover from £500k to £30m, and larger businesses are scoped on the discovery call.

The accounts

Where recruitment agency accounts mislead

A recruitment agency's filed accounts hide things a buyer's accountants will find in the first week, starting with the gap between turnover and net fee income. We correct for them before anyone else does.

Turnover that is mostly payroll. A temp agency's turnover includes the contractors' pay. Net fee income, the margin left after contractor costs, is the figure buyers use, and it can be a small fraction of turnover. Two agencies with the same turnover can have very different values.
Perm fees booked before they are safe. A placement fee invoiced on the start date can still be partly refunded if the candidate leaves inside the rebate or guarantee period. If the accounts carry no provision, profit is overstated.
Holiday pay for temps. Holiday pay accrued by temporary workers and not yet taken is a liability. If it has not been provided for, profit is overstated and the buyer will treat the balance as debt.
Temp-to-perm fees. Transfer fees charged when a client takes on a temp are one-off income. The Conduct of Employment Agencies and Employment Businesses Regulations 2003 limit when they can be enforced, and a buyer strips them out of maintainable earnings.
An owner who bills. If the owner runs a desk and draws a modest salary topped up with dividends, the buyer costs in a market-rate replacement for both the billing and the management. Earnings fall by the difference.
Accrued income on timesheets. Hours worked but not yet invoiced at the year end sit as accrued income. If the accrual is generous, or includes timesheets a client is disputing, profit and working capital are both overstated.

The offer

The valuation, the fee and how to start

You receive a valuation memorandum, a written report and a locked Excel model, delivered in 2 working days. Mark Ross Roberts FMVA CBCA does the work himself. Nothing is passed to a junior analyst.

Annual turnover	Independent valuation	With funding feasibility
£500k to £5m	£1,200	£1,700
£5m to £10m	£2,000	£2,500
£10m to £30m	£3,000	£3,500
Above £30m	Scoped on the call	Scoped on the call

All fees exclude VAT. Funding feasibility adds the bank debt a lender is likely to advance against the business and tests deal structures on debt service cover, which matters if your senior consultants want to buy you out or you are buying another agency.

How to start: email Mark at mark@achieve-corporation.com with a line on the business and what the valuation is for. You get a reply the same day, then a free discovery call that confirms the right report, the fee and the turnaround. Nothing is payable until you agree to go ahead.

Email Mark for a free discovery call

Questions owners ask

Frequently asked questions

I've had an offer for my recruitment business. How do I know if it's fair?

Before you reply, compare it with an independent valuation built from your accounts and your net fee income split by desk and by client. That shows what a buyer is likely to pay, what reaches you once invoice finance and other debt are repaid, and how much of the price rides on your billers staying through the earn-out.

Is an independent valuation worth it if I already have a broker's figure?

Brokers often quote to win the instruction, sometimes as a multiple of turnover that is mostly contractor pay, or of net fee income no buyer has tested. An independent valuation has no stake in the number. It shows every adjustment, from temp holiday pay to perm rebate provisions, so you can test the broker's figure line by line. The fee is fixed, from £1,200 excluding VAT.

Will you try to sell me a sale mandate afterwards?

No. The fee is agreed up front and stays the same whatever the number, and the report is yours to show a buyer, your invoice finance provider or a departing shareholder. Agency owners rarely go on to instruct us to sell after a valuation, although it has happened. You are under no obligation to instruct us for anything else.

How much is my recruitment business worth?

There is no reliable rule of thumb. The value depends on how much of your net fee income is contract margin that renews itself, how many billers it depends on, whether your clients belong to the business or to individual consultants, and how clean your contractor tax position is. A multiple of maintainable EBITDA comes at the end of that work, followed by deductions for invoice finance, other debt and working capital at completion. Published averages come from larger businesses in other sectors, whose turnover is rarely contractor pay, so they say little about an agency.

Do buyers value temp and perm income differently?

Usually, yes. Contract margin from long-running assignments recurs weekly, so buyers tend to rate it as more dependable than permanent placement fees, which have to be won again every month. The valuation splits your net fee income between the two and tests each separately.

Is my invoice finance facility deducted from the price?

In almost every deal, yes. The amount drawn against your debtor book is treated as debt in a cash-free, debt-free price, so it reduces what you receive. The buyer also expects a normal level of working capital left in the business to keep paying contractors.

What happens to the value if my best billers leave after the sale?

The buyer prices that risk before you sign, usually by moving part of the price into an earn-out tied to those desks. Restrictive covenants that a court would enforce, and a management layer below you, reduce how much a buyer holds back.

Has the umbrella company change affected what my agency is worth?

It can. Since 6 April 2026 an agency can be held jointly and severally liable for PAYE that an umbrella company in its supply chain fails to pay. Buyers now ask how you check the umbrella companies your contractors use, and price any gaps as an indemnity or a retention.

Will my consultants find out I am having the business valued?

No. An NDA is available before you share any figures, and your staff, clients and contractors are not contacted.

How long does a valuation take?

Two working days once we have your accounts, your management information and net fee income broken down by consultant and client. The fee is fixed and agreed before work starts.

Sources:

Valuation guides: EBITDA analysis · Earnings multiples · Asset-based valuation · Discounted cash flow

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