Fixed-fee valuations of permanent, contract and temporary recruitment agencies.

A recruitment agency is valued on the maintainable profit from two different income streams: placement fees from permanent roles, which depend on consultants winning new work every month, and contractor margin from people on assignment, which recurs while those assignments run. A buyer pays more for a steady contractor book and a team of productive consultants than for one star biller. Payroll tax, labour hire licensing and working capital are checked as well. Agency Valuations prepares an independent written report at a fixed fee: $1,495 + GST for agencies turning over under $2 million, delivered in 2 business days.

How is a recruitment agency valued?

We value most recruitment agencies on capitalised maintainable earnings, built up from net fee income: placement fees plus contractor margin after the contractor's pay and on-costs such as superannuation, payroll tax and workers compensation insurance. Turnover is a poor guide on its own, because contractor pay flows straight through it.

The accounts are then adjusted to what a new owner could expect to keep: the owner's pay is reset to a market wage, consultant bonuses are matched to the fees that earned them, and unusually large one-off placements are separated out. The capitalisation rate reflects how secure that profit is, and the report shows each step.

Is a contractor book worth more than a permanent desk?

Usually, yes, because contractor margin arrives every week while assignments continue, whereas placement fees must be won again every month. A contractor book is valued on its detail: how many contractors are on assignment, the margin on each, when assignments end, how often they are extended, and how much rests with one client.

Preferred supplier agreements and panel places are read for term, rate cards, termination rights and whether they can pass to a new owner. On the permanent side, retained search is more secure than contingent roles, and open replacement guarantees are treated as a liability, because a candidate who leaves early can mean a refund or a free replacement.

What moves a recruitment agency's value up or down?

• ·Contractor book: number on assignment, margin per contractor, assignment end dates and extension history.
• ·Consultant dependence: the share of net fees from the top one or two billers, and whether the owner is one of them.
• ·Client concentration: the share of net fees from the largest client, and the terms of any preferred supplier or panel agreement.
• ·Database and systems: a clean, current candidate and client database owned by the agency, not by individual consultants.
• ·Working capital: contractors are paid before clients pay, so debtor days, bad debts and any invoice finance facility affect value.
• ·Compliance: payroll tax, superannuation, correct pay rates for on-hired workers and any labour hire licence the agency needs.

What happens when consultants leave?

In recruitment, relationships walk out of the door every night. If one consultant, or the owner, produces most of the net fees, a buyer is paying for income that could follow that person to a competitor. The value reflects that risk unless fees are spread across a team, client relationships are shared, and the agency's records are complete and in its own systems.

Employment terms, including restraints and confidentiality, are reviewed because a buyer will ask for them. Whether a restraint would be enforced is a question for your lawyer; the valuation looks at how much income is exposed if it is not.

Do payroll tax and labour hire licensing affect the value?

Both affect the margin and the risk a buyer inherits. In Victoria, for example, under an employment agency contract the agency is treated as the employer for payroll tax and pays tax on wages paid to the on-hired worker, even where that worker contracts through a company, and the contractor exclusions do not apply. Contractor margin is valued after those costs, and any shortfall in past years is a liability that stays with the company on a share sale.

Agencies that on-hire temporary or contract staff may need a labour hire licence. Queensland's regulator gives an employment agency that on-hires temporary administration staff as an example of a labour hire provider; South Australia extended licensing to all industries from 29 January 2026; Victoria and the ACT also license providers. A licence is held by the business entity, so an asset buyer needs its own before supplying workers. In the ACT, employment agents no longer need a licence from 1 July 2024 but still may not accept a fee from people seeking work.

When do recruitment agency owners need a valuation?

• ·Selling the agency or its contractor book, or testing an offer.
• ·Buying an agency, a desk or a contractor book.
• ·A partner or shareholder exit under your shareholders agreement.
• ·Equity for senior consultants, where shares or options need a market value under the employee share scheme rules.
• ·Restructures and related-party transfers, where tax law looks to market value.
• ·Small business CGT concessions, where market value is needed for the asset threshold tests.
• ·CGT reform: from 1 July 2027 the 50% CGT discount for individuals, trusts and partnerships is replaced by cost base indexation and a 30% minimum tax for gains accruing after that date, so a valuation at 30 June 2027 may be useful.
• ·A dispute between owners, where an expert report is needed.

What do we need from you?

• ·Financial statements for the last three years and year-to-date management accounts.
• ·Net fee income by consultant and by client for three years, split between permanent and contract.
• ·A contractor list with client, start and end dates, pay rate, charge rate and extensions.
• ·Preferred supplier and panel agreements, and your standard terms of business and guarantee policy.
• ·Payroll tax returns, labour hire licence details for each state, and any compliance notices.
• ·Debtor ageing, bad debts and any invoice finance facility.
• ·Owner salaries, personal costs run through the business, and your shareholders agreement.

How much does a recruitment agency valuation cost?

Fees are fixed and set by your agency's total annual turnover, excluding GST. A Small Business Valuation is $1,495 + GST for turnover under $2 million, delivered in 2 business days. A Medium Business Valuation is $2,495 + GST for $2 million to $3 million, and a Large Business Valuation is $3,495 + GST for over $3 million to $10 million, each delivered in 3 business days. Above $10 million the fee is quoted in writing before work starts, with the delivery date agreed before commencement. An expert report for a dispute or court is $4,495 + GST, with the delivery date agreed before commencement. Each extra past valuation date is $495 and each additional entity is $795. Delivery time starts once payment and all required information have been received.

Every report follows the guidelines of APES 225 Valuation Services and is signed by a suitably qualified business valuer. We value agencies; we do not broker or sell them.