Executive search within the private equity space
Abe, what led to the firm’s expansion into the U.S.?
Our expansion into North America was always the natural first step and a necessary one as part of our drive to scale our business globally – America has always been our main market of interest. Remarkably, however, we were able to expand here in our early years without having a physical presence. Our clients that we began working with in Europe were global businesses and were investing in North America. That’s where they saw their own growth happening. Eventually, we reached a point where we had consecutive years of multimillion dollar revenues in the U.S., and our physical presence became absolutely necessary – New York, Atlanta and San Francisco are where many of our clients are based, so those locations were important to us.
Discuss some current searches you’re working on.
We are the primary executive search firm for all CIO and digital and cybersecurity executives for one of the world’s most prominent billionaire activists and private equity firm owners – and are currently leading CIO and chief cybersecurity officer searches for their multi-billion dollar portfolio businesses. Other roles include:
- CEO for a private equity backed, CFO advisory firm based in San Francisco that specializes in the VC and pre-IPO markets
- Global CIO for a leading digital and strategy consultancy with nearly $10 billion in revenues
- Executive chairman and private equity operating partner to head up the industrial technology portfolio for a leading middle market private equity firm
- In the fast growing fintech space of consumer finance and lending, global head of strategy & partnerships and alliances for the leading NYSE-traded company which recently had its IPO.
“Our clients that we began working with in Europe were global businesses and were investing in North America. That’s where they saw their own growth happening.”
Do you foresee more future growth within the U.S. or in other regions?
Absolutely. Having established our U.S. base in Atlanta, and our second office most recently in New York City, our 18-month strategy includes expansion to San Francisco (where many of our global clients are headquartered). In addition to expanding to new regions in the U.S., our growth strategy includes tripling the size of each office (including London) over the next 24 months.
Explain the leadership needs of portfolio companies within the private equity space. What functions and roles are hot?
In short: Supply chains, sales and industrial. Supply-chain technology is particularly important right now for private equity firms that own portfolios of similar and disparate companies; however, they’re looking to draw synergies between these businesses. So, for example, we’re seeing this synergy played out with private equity firms which may own distribution or manufacturing, who are then going on to buy retail businesses, and are connecting these through supply-chain technology. The operational levers which have been private equity’s bread and butter in improving businesses are not sufficient to keep up with the pace of the market. We’re finding firms have to find ways through supply chains to drive value. Another area includes sales and finding new channels and partnerships. Integration is essential for businesses acquiring other businesses. Therefore, we’re seeing private equity improving their assets once acquired. From our perspective, we enjoy and specialize in the middle-market private equity space. We feel that (within the middle market) you can see real and immediate impact on the businesses from the executives we place. We find these clients in the middle market value the executives as much as they value the right businesses they’re looking to acquire. Finally, industrial technology is another booming area for us.
Can you give us an overview of the current state of the private equity sector?
Right now there is so much dry powder (money to invest) in the PE space due to the fact that high net worth individuals, endowments and pension funds are putting their money less into traditional investment vehicles, like institutional investment firms, and more into PE firms as LPs (limited partners or investors in their funds).
With additional capital comes a lot of competition for attractive companies on the market. When that occurs, PE firms are overbidding and the multiples are very “frothy,” or in layman’s terms, over paying for companies compared to historic, expected multiples. Now that sellers are getting many attractive bids for their company, it has become less about who will pay the most money for the asset, but more about which firm will get us the best outcome and the best valuation after the hold period. We have found that PE firms are now utilizing traditional executive search firms to help them to identify semi-retired executives with deep industry knowledge, operational expertise, and connections to advise them in the deal process. These advisors help them “win the deal” and ultimately convince management and owners that they are the right partners for the future of their companies because that executive will sit on the board and utilize their knowledge base and connections to help them hit their financial goals.
Contributed by Scott A. Scanlon, Editor-in-Chief; Dale M. Zupsansky, Managing Editor; Stephen Sawicki, Managing Editor; and Will Schatz, Managing Editor – Hunt Scanlon Media