Business Valuations

Valuing recruitment businesses requires specific understanding of the industry to ensure that suitable metrics are applied. Our track record of more than 20 years of advising on the buying and selling of recruitment businesses means that our clients benefit from our knowledge of market conditions and how business are valued in practice.

Our Experience

We have prepared valuation reports for the following reasons:

Owners seeking general guidance on the value of their business

Evaluating acquisition targets

Shareholder disputes

Shareholder buyouts

Share option schemes

Expert witness reports for Court hearings

Valuation Methodology

The accepted method for valuing recruitment business is:

EBITDA x Multiple = Enterprise Value
Enterprise Value + Cash – Debt = Equity Value

Deduction of debt is a crucial aspect of valuation and must not be overlooked. Factoring and Invoice Discounting is generally treated as debt, although there may be scope for negotiation.

Factors which Impact Value

Valuations can be impacted by a wide range of factors including:

Sector in which the business operates

Profit trend

Reliance on shareholders

Client concentration

Compliance

Margin pressure and trends

Temp or contract vs perm mix

Knowing how a business compares to its peers and to businesses which may have already been acquired will also impact on valuation.

In addition to these business-specific factors, overall market conditions and sentiment towards the recruitment sector will impact on valuation.

Our Reports

We tailor each business valuation to our client’s specific requirements. Reports range from full valuations to guideline valuations, which are often appropriate as a first step.

Testimonial

“We engaged Optima to prepare a valuation of Spencer Ogden as the basis for agreeing a share price for the sale and purchase of shares between the two founding shareholders… We were impressed with Optima’s approach and their report, which incorporated a range of valuation methodologies and drew on their extensive knowledge of the recruitment sector… I would happily recommend any recruitment business seeking corporate finance advice to work with Optima.”

Sir Peter Ogden

Co-Chairman, Spencer Ogden Limited

Read our article ‘How Recruitment Businesses are Valued’

View all articles on our ‘Resources’ page