Recruiting Firm Multiples

searcher profile

December 01, 2021

by a searcher in New York, NY, USA

Hey Community,

Has anyone successfully acquired / has experience with recruiting firms and understanding size vs. multiples? Non-recurring revenue + risk + relationship driven trying to understand more. Couldn't find in BVR so wanted to ask.

Thanks in advance

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commentor profile
Reply by an intermediary
from New York University in Menlo Park, CA, USA
Andrew-
I did some research in this space recently and believe 2-3x SDE is a viable range for a small owner/operator type firm. As the firms grow, they become priced as a typical services based business with 3-5x EBITDA.

All the firms out here are doing exceptionally well right now. Of course when the economy slows and the labor market is less tight, the larger firms with significant overhead will see a drop in profitability.

Hope it helps.
David
commentor profile
Reply by a searcher
from University of Pennsylvania in Salt Lake City, UT, USA
Agree with comments on cyclicality. I know distressed investors that love to pick these up on cycle blow ups. Very cash flow generative businesses when things are working well though. Multiples vary by end market exposure. Multiples will be higher for recruiting firms with exposure to end markets that have more durable demand profiles. Good luck!
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