Ever try to sell a recruiting firm? We have and we have helped some of our clients sell too. In the process, we discovered the three most important assets (beyond revenue) that contribute to the value of a recruiting firm:
- The Employees/Recruiters
- The Clients
- The Database of vetted candidates built up over years
The real problem is that buyers see no tangible assets when they are analyzing a recruiting firm. The recruiters could leave as soon as the business is sold or the clients may find other providers because the employees and owners have left. So what is left? Your database!
Now there are recruiting databases and then there are recruiting databases. The truly valuable ones have a rich reservoir of filled and closed or unfilled job orders that have candidates that were considered for the positions. The filled positions are the very source of revenues contributing to the primary value of the recruiting firm.
But what about the candidates that were considered for the position but not necessarily hired? If your recruiting firm considered a candidate enough to present them to the client, there must have been some vetting (or at least we hope so!) which means that, hired or not, they are still good, highly qualified candidates.
This is the primary difference between recruiters who rely on sourcing the internet for candidates and recruiters who rely on their database of pre- qualified candidates with track records of how their qualifications performed when presented to jobs. One recruiter is only as good as their last placement and one recruiter gets better and his company grows in value with each job order worked. You guess which is which.