Recruitment sector M&A activity quarterly update

The UK recruitment and workforce solutions sector recorded 19 deals in Q1 2026, matching the quarterly average from the previous year and signaling a stable start to the annual cycle. Trade buyers emerged as the dominant force, accounting for 47% of transactions, while private equity activity remained heavily concentrated on add-on acquisitions for existing portfolio companies. This period of steady deal flow highlights a strategic shift toward specialist niches and high-value consulting models as firms navigate a selective but optimistic economic environment.

Q1 2026 recorded 19 UK recruitment and workforce solutions deals, consistent with the 2025 quarterly average. Activity was notably spurred by Advent’s $1.3 billion take-private acquisition of Heidrick & Struggles, which renewed interest in the executive search segment. Trade buyers narrowly led the market with nine transactions (47%), while private equity (PE) investors accounted for eight deals (42%). Within the PE space, 75% of transactions were add-on acquisitions for existing portfolio companies, including Southfield Capital’s deal with Metric Search—which saw a successful exit for minority investor BGF—and Stephenson Capital’s investment in Realise HR.

The engineering and construction sector saw a massive spike in activity, accounting for over 50% of Q1 deals compared to just 19% in 2025, largely due to a five-deal acquisition spree by Meraki Capital. The education sector also remained active with bolt-on deals such as Anzuk Education’s acquisition of Apple A Day Supply and Zen Educate’s purchase of AK Teaching. International interest showed signs of recovery with three overseas acquisitions from US and French buyers, including US-based Launch Technical Workforce Solutions acquiring JMC Aviation. This represents an increase from the single overseas deal recorded in the final quarter of 2025.

Despite the overall stability, the market saw a reduction in management buyouts and debt-funded deals, with the senior leadership buyout of Cast UK being a notable exception. Current market sentiment is characterized by cautious optimism as firms demonstrate growth on leaner cost bases, particularly those in specialist niches or those with access to overseas markets. There is a visible flight to quality, with buyers favoring high-margin business models like executive search and consulting over traditional staffing. Experts anticipate that as EBITDA strengthens throughout 2026, the sector will see an evolution from value creation within portfolios toward more frequent exits and improved market sentiment.