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Human Resources Sector ‘poised for growth’

The UK’s HR and Human Capital Management (HCM) industry is experiencing a wave of transformation, driven by digital innovation, shifting regulations and changing workforce demands. From outsourced HR and compliance services to advanced workforce analytics and talent platforms, the sector’s breadth and scalability make it an increasingly attractive proposition.

Organisations are turning to outsourced HR solutions to streamline operations, reduce costs and stay compliant. This shift has captured the interest of investors and strategic buyers, particularly those looking for scalable, tech-enabled businesses with recurring revenue models.

M&A activity in the HR space has surged globally, with 2022 setting a record and 2024 continuing the momentum. The UK recruitment sub-sector remains resilient, with deal volumes rising in 2024 despite broader market headwinds.

Human Resources Sector ‘poised for growth’

READ OUR MARKET INSIGHT

Rapid Transformation

The industry is evolving thanks to digitisation, regulatory shifts and evolving workforce expectations

Record activity

Post-pandemic, the sector recorded record levels of M&A activity and has continued to demonstrate strong growth

Up to 15x Multiple

In the UK, EBITDA multiples for company sales in this industry typically range from 5x-15x, averaging more than 8x from 2021 – 2024

Rising demand

Demand for integrated HR platforms and people analytics are having a positive impact on company valuations

OUR SECTOR ACTIVITY

The UK HR and HCM sector is seeing strong deal activity, driven by businesses with recurring revenue, high client retention and strategic innovation. Buyers are paying premiums for SaaS and subscription-based models that deliver steady cashflow and strong customer engagement. Technological capabilities that align with acquirers’ growth strategies—such as AI, cloud migration and compliance automation—are also commanding higher valuations.

Private equity is actively consolidating the space through buy-and-build strategies, with 30% of 2024 HR deals involving PE-backed add-ons. Investors are targeting scalable, tech-enabled platforms across areas like employee engagement, payroll, learning and development, and self-service HR tools. Recent KBS transactions in the sector include OHS’s sale to Latus Group, The Compliance Group to Black Mountain HR, FPR Group to Kingdom Group and a Vivup’s management buyout backed by Omni Partners.