Adnan Sajid is corporate finance partner at top 20 accountancy firm UHY Hacker Young’s Manchester office. Here, he gives his tips on maximising the sale value of your business….
Recruitment is an industry which is built on finding the perfect balance of skills, knowledge and experience to help clients reach their goals.
The same thinking process is applied when choosing an accountant to advise on the possible sale of your recruitment business.
Here are 10 things to consider, reflecting the latest thinking from real-life conversations with buyers of recruitment businesses:
- Forget everything you have previously known about selling your recruitment business. Be prepared to think differently and have an open mind. It’s important to also talk to recruitment specialist M&A people to ensure you’re given the right guidance.
- Define who you are as a business and what you stand for. Ask yourself what is your identity as a business? Consider the culture, vision and brand ethos. Having a strong brand identity shows how bound your staff are to those values. Cultural engagement companies can provide information on everything from productivity to staff motivation levels. If you can provide plenty of real-data it puts you in better stead when it comes to sale.
- How good is your business plan? When was the last time you revised or updated it? The main areas to focus on are your key markets and how to reach them. You should also decide which markets to spend more time, money and resources developing. A frank assessment of your competitors is vital – find out what they’re doing well and what they could improve. Learn from their mistakes and successes just as much as your own.
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- Before proceeding, you should have a detailed three to five year financial plan which should recognise target head counts, target net fee income (NFI) and splitting NFI into quartiles, breaking down revenues and cost of sales by office and market. If you don’t have this in place, why not? If you do, can you demonstrate and measure how your progress is along that plan, and have you revised targets and budgets on a rolling basis?
- Record your customer stickiness for each key market, contract or perm, and each key sector. Figure out how many are repeat clients and how to track account management beyond what the individual recruiter does? CRM systems and databases are integral in delivering data which gives buyers an idea of everything from client retention levels through to staff turnover. Gross margins on placements are also vital to measure.
- Document and measure your induction of new consultants; measure how long it takes them to get the first deal done, then second, third, fourth. What is the average break-even period for each consultant, or batch of consultants?
- Carefully record and track churn rate or attrition of your consultants. Work out how many fail as new inductees and how many leave as experienced consultants. Ideally you should be able to define and stratify levels of experience of your consultant base, everything from less than 12 month, 12 to 24 months and so on.
- Do you have independent surveys of your customers, both candidates and clients? If not start to put some in place in order to build a more three-dimensional, balanced view of your business. If surveys within your business already exist, analyse the feedback and re-measure to show progress.
- Analyse the software you use as a business and assess its overall effectiveness. What size appropriate technology or software do you use in your recruitment business and why? Has the implementation and adoption been a success? What could be done better, what is really key and what is unnecessary or simply ‘nice to have’?
- With specialist sector advice from your accountant, you should consider producing a monthly pack, no longer than six pages long detailing key financial and non-financial data that summarises the performance of the business in terms of year to date, in the month and against budget.
Selling a business is never easy, but with the right preparation and deal team it can become a streamlined process. UHY Corporate Finance work closely with recruitment business owners and buyers all over the UK and internationally. The firm has a significant footprint in the recruitment sector acting for numerous clients all over the UK.
Adnan will be discussing this topic in more detail at an upcoming event aimed at Recruitment Business owners, where he’ll be using his extensive experience in Mergers and Acquisitions to explain the process of selling a recruitment business. To find out more information click here.
Adnan Sajid
https://www.uhy-uk.com/sectors/recruitment/
