New Heritage Capital is a private equity firm with a boutique practice of investing in owner-managed and operated businesses. Under terms of the deal, Execu | Search will retain operational control, and the existing management team will remain in place. All offices, services, and operational processes as well as account representatives and assigned recruiters will remain unchanged.
The firm says the goal of the partnership is to continue to provide its clients with industry leading services on an even broader scale with a more diverse and innovative mix of service offerings. The funding will allow for more investment in these areas.
Partnering Closely With a Funding Source
“The investment from New Heritage Capital will be used for aggressive growth plans, which include acquisitions, which will not be geared to any geographic areas,” said Edward Fleischman, Execu | Search founder and chief executive officer. “Our target industries include additions to our existing healthcare platform, as well as healthcare IT/ EMR, creative, as well as the information technology sectors.
New Heritage Capital plans to use Execu | Search’s recruiting services to fill critical roles at some of its leading portfolio companies. The search firm will initially partner with Heritage portfolio company Covalent Health, a provider of inter-facility medical transportation solutions to hospitals, skilled nursing facilities, and specialty clinics in Northern California, to assist in their talent acquisition needs.
“We are very excited about the opportunity to partner with Heritage and we see this as the beginning of the next chapter in the success story of The Execu | Search Group,” said Mr. Fleischman. “With the investment, we have an incredible opportunity to take our company to the next level as we accelerate our already impressive growth by working with their professional team to seek additional opportunities in the market.”
Headquartered in New York City, Execu | Search was founded in 1985 focused on serving accounting firms, boutique hedge funds, and private equity funds. Over time, it has evolved with additional offices in New York, New Jersey, Connecticut, Massachusetts, and Florida. The firm serves a number of practice areas, including accounting & finance, creative & digital, engineering, financial services, health services, HR, IT, legal services, life sciences, and non-profit.
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Reaping the Benefits of Funding
“Other executive search firms have reaped the benefits of private funding and more deals are rumored to be coming next year,” said Scott A. Scanlon, founding CEO of Greenwich, Conn-based Hunt Scanlon Media. “The focus for investors is on growth and platforms that can scale and push expansion globally.”
Just recently, U.K.-headquartered executive recruiter Norman Broadbent raised more than $3 million from new and existing equity investors to fuel future growth plans. The investment comes from a range of high profile investors, including Miton and City Financial Investment. Backing was also secured from existing investors, including Jon Moulton (a substantial shareholder of the firm), Downing LLP and Ennismore Fund Management. The firm’s investment plans include strengthening the core Norman Broadbent executive search business.
SmartRecruiters recently raised $30 million in series C financing, led by New York-based venture capital and private equity firm Insight Venture Partners. The company plans to leverage the additional capital to sustain its rapid growth, accelerate its global market presence, and continue to invest in its product footprint to serve the needs of enterprise companies.
Executive search firm Elliot Group just entered into a strategic investment agreement with Steve Lockton, executive vice president and owner at the Lockton Companies, a privately held insurance broker and risk management consulting firm. Under terms of the agreement, Mr. Lockton has made an undisclosed equity investment in Elliot to further advance both firm’s ability to leverage existing business and create new opportunities in the global marketplace.
U.K.-based executive search firm The Up Group secured investment from mid-market private equity firm Livingbridge as the recruiting firm targets further domestic and international growth. With demand for its services growing, Up Group is planning to use the funding to strengthen its delivery capacity, as well as expand its international footprint. It will take some of the investment capital to accelerate its ‘Digital Masters’ program, which brings together industry leaders throughout the year at a variety of exclusive networking events.
ZRG Partners completed a private equity fund raise nearly two years ago. According to the firm’s CEO, Larry Hartmann, the funding “provided fuel and capital to now safely execute our long term growth strategy.”
According to Tim McHugh, a partner and global services analyst for Chicago-based William Blair & Co., executive search firms are “capital efficient businesses,” which makes them attractive to investors. He said the search sector also happens to be at a cross-roads where expansion into ancillary sectors, like leadership consulting, is opening up room for growth “and an opportunity to develop more consistent, deeper relationships with clients.” The biggest risk to investors, he said, is appropriately identifying the value of the firm versus the importance of the individuals at the firm.
“We see solid growth opportunities for mid-sized search firms that are big enough to service global clients and expand their solutions, but are not yet meaningfully held back by off-limits issues,” he added.
Contributed by Dale M. Zupsansky, Managing Editor, Hunt Scanlon Media