Valuing a recruitment business

Share this: 

Understanding how a business is valued, and the levers that can be adjusted to influence a valuation is critically important when scaling a business for an exit.

As a shareholder in a business being sold, it can be easy to let personal bias cloud your judgement when valuing the company. Even if you strongly believe the business has the potential to be successful, it’s important to set that feeling aside and analyse the company objectively, as a potential investor would do. 

Everyone will have a view over which items are the most important when valuing a (recruitment) business, but from an investor, acquirer or purchaser perspective there are a core set of metrics that can influence that valuation.

A simple rule of thumb relates to applying a market-influenced multiple to the EBITDA of a business. That multiple is typically influenced by a range of factors – and we’ve summarised the main ones here.

Factors that can influence a recruitment company's valuation


Understandably, a company's profit is one of the most surefire ways of influencing a valuation or multiple. Good turnover to GM/EBITDA conversion and sustainable growth are key.

Margin %

Higher margin businesses, and companies that are sustainably improving their margins will typically see better valuations.

Temp and perm mix

Understand how the split between temporary and permanent recruitment can affect a company's valuation.


The extent to which a business is focused on a narrow(er) range of sectors or services can influence its valuation.


Aside from the cyclical nature of markets, certain sectors are often perceived as being more robust, offering higher margins and therefore positively influencing any valuations.


Geographical coverage, either physically or virtually, can support well-developed market penetration, a compelling growth narrative, and influence a company's valuation.

Use of technology

Automation, standardisation and adopting suitable technology can make businesses more efficient and streamlined, with the scale and the success of technology adoption influencing a company's valuation.

Disruption capability

A business either operating in a disruptive sector, or is itself disruptive, can command a higher valuation multiple.

Succession planning

Future investors want to know what happens after they invest, so having a clear succession planning strategy and ongoing narrative is critically important.


Does the business have the right infrastructure, systems, policies and structure to support ongoing growth? Solid, scalable infrastructure is essential.


Strong cash flows, and visibility of future cash flows, can support future growth and earnings. Being able to evidence this will directly influence a company's valuation.

Multiple clients & tenure

Whether it's a balanced portfolio or just general diversification, a broad approach to clients, and long-standing relationships are positive factors in company valuations.

Future proof

Companies that are ready for the future, adopting technology, diversifying appropriately, growing sustainably, and are able to change when required, are often perceived as being future proof, and are therefore more valuable as a result.

Market cycle

Markets are typically cyclical, with the appetite for deals rising and falling, just as the multiple valuations change too.

About Bluestones

Bluestones Investment Group invests in staffing service companies. We operate a balanced portfolio of businesses in specific divisional sectors and are always keen to receive investment enquiries.

Latest Group news

Follow Us


What you need to know

Although our existing brand portfolio operates across five core sectors, we’re not restricting future investments to just those. If you have a good proposition and a believable plan, that’s half the battle – so talk to us today about how we can help.

We’ve refined our start-up process so that we can typically launch a new recruitment business, fully set up with all the necessary branding, systems, and accounts, within a matter of weeks. 

Firstly, we need you to submit your investment enquiry. You can do that HERE.


As long as there’s sufficient detail in there, our Investment Director will review your proposal. All investments submitted will receive personal feedback.


After that, if your investment meets our criteria, our Group CEO and CFO will review and sign off on the investment and we’ll get heads of terms and shareholder agreements drawn up. As an equity stakeholder in your new business, it’s important we get this all agreed up front.

Our investment criteria is fairly simple; we’re looking for the following:


  1. A realistic budget.
  2. Demonstrable knowledge in your location(s) and sector(s).
  3. Proven sales growth and track record.
  4. A structured plan for your new business.
  5. A vision for how you want to develop your business.

We expect you to have at least 3-5 years’ experience in your chosen sector. We need to have confidence that you understand your market and have a well-developed network of clients and candidates.

We offer one of the best all-round investment and support packages available for recruiters and recruitment businesses. From providing all of the upfront funding, guaranteeing salaries, providing office premises, full provision of IT equipment and services, and all the support services you need, including IT, legal, HR, Finance, etc.

We’re focusing on recruitment businesses within the UK right now and already have established recruitment hubs in Birmingham, Chester, Leeds, Liverpool and Manchester – with other offices around the country. 


As long as you’re based in the UK, you can trade wherever, and we can support you.

We invest in businesses that we believe can be successful. That means a business that can scale and grow at pace, that is typically break-even in year one of our investment, and ready to exit in year three, or preferably join our core recruitment business portfolio for further growth, increased value, and wealth creation. 

Speak to me about your investment

Matt Cody

Investment Division CEO

“We have a proven approach to investing in the recruitment sector, scaling businesses rapidly, and creating value. Let's talk."

Related content

You may also be interested in this…