Growth by acquisition and consolidation

Nick Gordon, Founder and Chairman of Meraki Capital, spoke at TALiNT Partners' Future of Staffing & Talent Solutions Summit earlier this month. Twenty minutes on what buyers actually look for, what AI is really doing to valuations, and what you have to protect once the deal is done.

Every recruitment owner has had the argument. Do we grow it ourselves, or do we buy something?

Nick's answer was that it was never either/or. It is a question of pace. Building it yourself works. It just takes years. Hire someone, train them, wait for them to bill, then do it again. Buying gets you a team and a client list on day one. Same destination. Very different clock.

And Meraki chose the faster clock. Two years. Nine acquisitions. Four brands: Tessero, Magnus Search, HW3 and SERT. Most of those deals were done while everyone else was waiting for a better market. Not because it was brave. Because values were down, and good owners were thinking harder about their options.

Three questions we ask ourselves

Before Meraki goes anywhere near a price, it asks three things.

Market. Is it specialist rather than a bit of everything, and is it actually growing? A small pond that is filling up beats a big one that is draining.

Model. What is the real value and the real return? Not the headline revenue. What actually converts, what recurs, and what it costs to keep it coming.

People. Right people, right seat. Not just whether they are good, but whether they are in the job the business needs them in.

Three yeses and we are interested. Two and we will talk. One and we won't waste your time.

Four reasons we walk away

Saying what you won't buy is what makes what you will buy believable. So Nick was just as clear about the other side.

When one client matters more than all the others. If losing one account takes half the business with it, that is a relationship, not a business. When the revenue lives in two people's phones. When it is a hundred per cent perm, because every pound of perm has to be won again from nothing, while a book with contract in it keeps paying. And when it's in France. That one got a laugh. But the point underneath is serious. Employment law in some markets can turn what looks like a clean deal into a long commitment, so know where your people actually sit before you go to market.

None of those get fixed by paying more.

AI and valuations

This is the question every owner in the room is being asked right now. Nick's view: AI affects valuations less directly than people think. Nobody pays extra because you have bought the software. Everyone has bought the software.

What moves the number is what the software does to four things. NFI, or net fee income: how much the business actually makes, rather than what passes through the books. NFI percentage: how much of that you keep once everything is paid for. Contract versus perm: one recurs and one doesn't, and the mix changes what a buyer will pay. And market trends: which way your sector is heading, because nobody pays a premium to buy into a market that is shrinking.

AI only counts where it moves one of those. If it lifts the numbers, it is worth money. If it just sits in the tech stack, it isn't.

If you're thinking of selling

The most expensive mistake has nothing to do with the offer. Most deals die before they even begin. Not because the business was wrong, but because the seller wasn't ready.

Get your numbers clean, with three years of them. Line your lawyers up before, not after. And have one version of your story that everybody in the business tells the same way. None of that is expensive. It is just not urgent until it suddenly is.

Why put them together

Buying is half the job. The other half is what happens next. Nine businesses side by side is just a collection. Being part of a group should make every one of them worth more than it was on its own.

The back office is built once and used by all of them. What one business learns, the others get. And every business still stands on its own, with its own plan and its own timing.

Growing without breaking it

Which brings it back to where the talk started. The easy part is the deal. The hard part is the year after it.

You can buy a good business. You can't buy a good culture. You have to keep it.

So the first thing Meraki asks a founder isn't what it is going to change. It is what it mustn't. Then it leaves that alone and puts everything behind it.

Being bought isn't the end of the story. Done properly, it is the next chapter. Same people, more behind them.

Better together.