From Growth to Exit: How Executive Search Firms are Unlocking Value

Executive search firm founders are raising capital, seeking PE growth partners, merging, and acquiring rivals to stay competitive during one of the industry’s most dynamic periods. Cody Crook, managing director at Hunt Scanlon Ventures, examines the increasing reliance on M&A across the human capital sector.

Hunt Scanlon Ventures hosted the latest installment of its Executive Recruiting M&A Founders’ Forum in New York recently to a sold-out crowd of more than 250 executive search consultants. They gathered to explore the current state of their industry and to learn how to navigate the complex M&A process

To be sure, merger and acquisition activity across the executive recruiting sector is reaching fever pitch. “Consolidation among competitors has been reshaping the industry for a number of years now,” said Cody Crook, the keynote speaker at the event. “But the complete paradigm shift we are now seeing across the space is leading to an extraordinary readjustment. It is something our firm has not seen in more than three decades of tracking the industry.”

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Cody Crook, managing director of Hunt Scanlon Ventures, offers a step-by-step blueprint on how to navigate a successful M&A transaction.

In recent years, executive search firms have evolved from being mere talent identifiers into strategic partners, offering a broader spectrum of services such as leadership development, assessment, coaching, interim solutions, culture alignment, and people strategy. This transformation has positioned executive recruiters as influential players in their field – and it has raised their value in the process.

“With favorable market condition tailwinds at their back,  search firm founders and their management teams are actively seeking ways to expand and remain competitive,” Cody said in a post-conference interview. “For a growing cadre of them that means walking down the path of M&A.”

Navigating The Turbulence

Developing a well-thought-out M&A strategy, he noted, is not without its challenges. “The M&A journey is akin to an emotional rollercoaster ride, filled with twists and turns, disappointment, and rejection.  But, more often than not, it culminates in gratification, fulfillment, and a successfully closed deal,” he said.

Following are excerpts from a recent discussion with Cody based on his keynote address, where he unpacks what it all means for founders, talent markets, and the human capital sector.


Cody, what are you seeing right now across the human capital space, and particularly in the executive search segment?

In business it always takes time for a paradigm shift to sink into the minds of operators. While outsiders looking at the human capital space may be vaguely aware of the changes that are taking place in the sector, you almost have to be at the ground level to understand just how sweeping the shift is that’s underway.  No longer is this a cottage industry populated with bit players. What has emerged in the last couple of years is a sector that many now believe is one of the highest forms of management consulting. It has taken time for companies, PE operating partners, and others to realize that talent is the key driver for success. Without the right people in place, there can be no value creation. And so executive recruiters have found themselves smack in the middle of that paradigm shift.

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Cody Crook, managing director of Hunt Scanlon Ventures, takes questions from the audience at Hunt Scanlon’s ‘Executive Recruiting M&A Founder’s Forum’ at The Harvard Club of New York.

What’s the biggest change you’re seeing?

Again, it’s the role that the executive search industry plays in the growth and expansion of businesses. Executive recruiters have move from simply identifying talent – which, when you think about it, is a single impact event – to managing a much more complex set of talent mandates around leadership development, assessment, coaching, interim solutions, culture fit, and people strategy. It is a powerful shift that we believe will create a new paradigm for search firms in the coming decade. In our view, the sector’s best days are still to come.

So, what does all this mean for valuations and how can search firm founders capitalize on this moment?

Because search firm leaders are bringing more tactical value to the table, and playing an increasingly larger role as strategic people partners to an ever-expanding client base, their value is rising. As a result, founders are trying to figure out how to capitalize on this once-in-a-lifetime change. That has made Hunt Scanlon’s M&A advisory business a valuable resource for founders as they take this journey. We have closed some of the most prominent deals in the space and our team is growing rapidly to keep pace.

What’s next?

For search firms fortunate enough to have financial leverage – firms like Bespoke Partners, ZRG, and Kingsley Gate that have all attained their financial leverage by way of private equity investment – the opportunity to rapidly expand with sophisticated playbooks is helping to fuel the merger and acquisition activity we have seen. High on the target list of these buyers are specialist boutiques that bring a functional or industry specific expertise, or an adjacency that might help to strengthen an existing platform or help launch a new one. Others might bring offerings to help differentiate and scale. Suffice to say, buyers are flocking to this sector, and that is good news for founders and their management teams seeking new opportunities and transitions for their businesses.

“High on the target list of these buyers are specialist boutiques that bring a functional or industry specific expertise.”

What are the challenges founders face as they consider walking down the M&A path?

No one doubts that the search sector is on the cusp of yet another period of substantial growth and expansion. In our view, much of that growth will be driven by M&A. Buying instead of building, and selling instead of building, is the fastest, easiest and most painless way to produce big results for buyers and sellers. But there are inherent challenges in developing a proper, well-thought out, and deliberate M&A strategy. Founders and their management teams starting an M&A process will be navigating unchartered territory.

Article By

Cody Crook

Cody Crook

Managing Director, Hunt Scanlon Ventures

Cody Crook is managing director and head of investment strategy at Hunt Scanlon Ventures - an M&A advisory firm that specializes in the human capital space. Cody is responsible for co-managing the firm's investment portfolio, which includes executive search, talent acquisition, private equity, and investment firms. Leading the investment team, he spearheads all fund transactions and maintains portfolio developments. He is also responsible for sourcing, managing and monitoring investments and working with external portfolio managers, analysts and investors on active and prospective transactions. Connect with Cody.

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