The impact of coronavirus has not been spread evenly across the recruitment sector according to the latest research from finnCap Group PLC (LON:FCAP) and this will spark an uptick in corporate activity when things normalise suggest the broker.
M&A will be more critical than ever for large corporates in the recruitment sector seeking to position themselves in a post-COVID-19 world, said the broker, especially given the structural changes at work.
Recruiters will be forced to acquire new capabilities to protect their competitive market positions and to add tech-enabled solutions and additional services as the market diverges into large global groups and agile niche sector specialists.
Mid-tier groups with little differentiation face a challenging time, finnCap suggests, especially with the continued growth of managed service providers.
Large recruiters will have to use M&A to deal with these structural issues suggests the broker as will owners of private recruiters who want to get the best value put on their business.
As a wider economic recovery takes hold, finnCap sees sustained deal activity as buyers acquire for growth and to meet the structural changes post-COVID-19 but it expects buyers to remain disciplined about prices based on its 2009 experience.
Share prices of the recruiters strongly since the onset of lockdowns in March and finnCap says that valuations have also bounced by 65%.
Deals, therefore, are likely to be closely aligned to strategies that fit with the post-pandemic structural trends.