Charles Aris Managing Director TJ Deal examines the M&A hiring environment

In this episode of the Charles Aris Podcast, Managing Director TJ Deal shares three reasons why our corporate development recruiting practice is seeing an uptick of searches in the M&A market:

Read the transcript below:

Hey everyone, this is TJ Deal, and I’m a managing director at Charles Aris Executive Search. As many of you probably already know, we’re a niche search firm that specializes in corporate development and strategy recruiting — in large part for private equity portfolio companies — and I lead our corporate development arm.

This is a practice I started just about seven years ago. It has since gone from myself to now a 14-person team that’s doing around 60 M&A searches a year for private equity portfolio companies, and we’re really focused on four different industry verticals: business services, technology, healthcare and life sciences and industrials.

This session is really focused on one of the biggest questions we’ve been getting over the last handful of months, which is: ‘What are you seeing in the M&A hiring environment,’ because there is a lot of news out there and noise out there.

It’s been really interesting, and the answer is that it’s probably the most fascinating market that I’ve seen since joining Charles Aris. Even more interesting than during the early months of Covid-19 in the sense that everywhere you look there are layoffs; banks laying off left and right; interest rates going up and up. Yet at the same time, we’ve never been busier as a practice in our history.

In fact, we began more searches in March than we have in any month in the history of this practice, and it’s been this really interesting thing where we’ve been bracing for this drop, and we just haven’t seen it in a significant way yet. Now, how could this be possible; how could this be the case? We’ve identified three reasons that we think this is playing out the way it’s played out.

The first is that private equity continues to charge on. M&A has become such a central thesis to a lot of these portfolio companies that for even some of these businesses that would admit it’s not an ideal time to be doing deals, we’re hearing a lot of ‘hey, we’ve got no choice but to charge on. Not having a head of M&A would be like not having a CFO or a CEO.’

The second is while some industries have slowed the course — it’s been a slower quarter for software, but not as slow as we would’ve thought — others have seen this as a much better time to buy. We’re seeing valuation going down in certain niches of business services, IT services, industrials and in healthcare. It’s a less crowded, competitive marketplace than it was probably this time a year ago.

The third reason is we probably have to give ourselves a little bit of credit. We’ve been bracing for this and preparing for it, and it’s probably paid off. That mixed with the fact that the executive search industry is becoming more and more niche, where specialized firms are taking more and more market share from the generalist firms, I’m sure that is playing into it as well.

In summary, while there is clearly uncertainty and shakiness in the general marketplace, and while we aren’t out of the woods yet by any means, M&A hires have stayed surprisingly resilient throughout.