How to value a recruitment business

[SamN01]

I am interested in valuing a recruitment business. Does anybody have any real experience or knowledge on current thinking in this area?

I have been told net profit x 6/7. Is this realistic?

(This was by a major player in the industry)

Thanks
Sam

[Eric Mc]

There have been quite a few threads on this type of topic. If you do a search under "buying" a business, "Selling" a business" or "valueing" a business you might spot some useful information.

Srebbe64 seems to be the most knowledgeable on this subject on PH.

[SamN01]

Thanks !

[SamN01]

Guys,

I have looked and cant seem to find the info I am looking for. Can anyone be a little more specific?

Rgds
Sam

[mikeyboy]

I'm no expert and certainly don't know the formula but I asked a buy-out banker about it once. He did tell me the calculation but I've forgotten it. The important part he made though was that you will have to have some form of staff retension policy as in most cases it is the contacts and expertise that your staff have that provides the true value of the company. If not the company will be a fraction of what you might think. a purchaser would see it as simply a database and customer good will.
Good luck

[srebbe64]

SamN01 said:

I am interested in valuing a recruitment business. Does anybody have any real experience or knowledge on current thinking in this area? I have been told net profit x 6/7. Is this realistic? (This was by a major player in the industry) Thanks Sam

Hiya, well I've sold a couple of recruitment companies. In short, it's worth what anyone's prepared to pay. That said, the sorts of numbers you quote would be pretty reasonable. I'm assuming the company's not got any major assets to speak of (property, etc). If it did then this would be a factor. Also, it's worth noting that the "real" profit should include various add-backs and add forwards (owners salary, replacement manager, etc..etc..) If you want to email me the company's accounts I'll be happy to give you a more objective view.