A Look at How Data-Driven, Tailored Search Drives Growth in Today’s Market

June 28, 2024 – Executive search has entered a new phase of evolution. Recruiters say that while old-school search firms across the industry continue to ply the same old trade they always have, a new breed of search is producing outsized returns for clients. “At Bespoke Partners, we are at the forefront of this evolution,” said Eric Walczykowski, CEO of San Diego, CA-headquartered executive search firm Bespoke Partners. “We are leveraging data-driven, tailored search methods that not only buck the trend but also drive unprecedented growth for our clients.”

Market headwinds persist across a wide range of industries. “But unlike search firms that have been suffering from slowdowns in company hiring, our team achieved record commercial results in the first quarter of 2024,” Mr. Walczykowski said. “This is a testament to the effectiveness of our tailored, data-driven search process. Because we specialize in executive search for private equity backed firms, we know better than any other firm which leaders will have the biggest impact on value creation.”

Bain & Company recently released a new report showing that annualized deal and exit rate for the private equity sector in 2024 is flat compared to 2023. The analysts say that this may indicate that deals and exits have found a bottom to the slowdown that started in 2022.

The analysts further reported that the number of portfolio companies held by private equity firms has doubled compared to 10 years ago, because of the slowdown in exits. “The overweight condition of the portfolio severely strains resources of the firms to help portfolio teams execute most effectively on value creation,” said Mr. Walczykowski.

This of course is why high quality management talent in the portfolio company has become of overriding importance. “How effective are operating teams at working with management to drive performance?” the analysts wrote. “Do teams have the right resources and capabilities to succeed, and, if not, where will you get them?”

The Bain report provides hard evidence that underscores the fact that talent is now the primary lever of value creation. “And, in fact, Bespoke’s numbers tell the same story,” said Mr. Walczykowski. “While others in the executive search space have been struggling, Bespoke is having a banner year because of the pressing need to optimize talent in private equity portfolios.”

Bespoke’s results so far:

• 31 percent growth rate year-over-year.
• 500 percent increase in our partners since 2021.
• 4,200 percent candidate network growth rate since 2021.
• 100 percent headcount growth since 2021.
• 260 percent increase in clients since 2020.

“These results stem from our team’s singular focus on delivering white-glove, finetuned service that precisely meets the strategic talent needs of our software and SaaS clients,” said Mr. Walczykowski.

Comprehensive Market Visibility

Bespoke conducts ongoing, in-depth analysis of the market landscape, identifying key trends, talent availability, and opportunities specific to each client’s sector in software and SaaS. “We use this knowledge to anticipate the talent needs for executing on value creation plans and the investment thesis,” Mr. Walczykowski says. “We also understand who will soon come on the market and will be looking for a new position, to give our clients a first-mover advantage on newly available talent.”

Functional Focus

Bespoke’s team is organized by functional role focus. Mr. Walczykowski explains that is why they have an in-depth network and a solid understanding of which executives are the best fit for which companies in each functional area. “A traditional search firm that tries to do everything for everyone might get lucky and find you a good CFO,” he said. “In our case, we know all the CFOs who can execute for you, which ones are open to new opportunities, and who is going to be the best fit for your company.”

Data-Driven Search

“We maintain an evergreen talent knowledge platform that tracks hundreds of thousands of executives who have led teams in software and SaaS, supported by an analytics process that parses candidate backgrounds and cross-references against multiple sources for validation,” Mr. Walczykowski said.

Related: PE Operating Partners Integrate New Role In Value Creation

As a proven growth executive, Mr. Walczykowski has served as CEO, president, board member, investor and advisor for technology companies that achieved over $4.5 billion in successful exits. He recently sat down with Hunt Scanlon Media to discuss Bespoke’s performance, what areas the firm is most active and what he foresees for the search sector looking forward.

Eric, how has Bespoke performed over the past year?

Over the past year, Bespoke Partners has achieved record-breaking performance despite market headwinds. We achieved a year-over-year revenue growth rate of 31 percent. That’s capping a 500 percent increase in our partners and a 4,200 percent growth in our candidate network since 2021. Our headcount has doubled, and we’ve seen a 260 percent increase in clients since 2020. These results underscore the effectiveness of our tailored, data-driven search methods for delivering high-impact leaders to our clients in half the industry average search time. In short, we have cracked the code for how to cut search time in half while producing better results at the same time.

What are the keys for the firm’s success?

We do executive recruiting for only software and SaaS and we specialize in private equity backed companies. We have been able to scale while maintaining our white glove, highly tailored service for clients. That success hinges on three core principles: comprehensive market visibility, functional focus, and data-driven search. We give our clients unparalleled visibility into the talent market because we continuously analyze trends and executive availability in 25 software and SaaS market subsectors, such as fintech, cybersecurity, supply chain, marketplace platforms, health tech and many others. Then our recruiting team specializes in functional roles, providing the industry’s deepest understanding of which executives will be the best fit for a given role. Our team members are experts in CEOs and board members, and leaders in finance, go-to-market, technology and people functional areas. Lastly, all of our processes are data driven, utilizing our evergreen talent intelligence platform and robust analytics that cover nearly 500,000 software executives in the market. These three principles are why we are outperforming while a lot of old-school search firms are really struggling today.

What types of clients are keeping you most busy?

We have seen a surge in demand across the board in our client base and in particular among private equity firms with value creation plans oriented around portfolio company growth. Market headwinds continue to make growth challenging for many software and SaaS companies. Since leadership talent is the key to driving growth, private equity sponsors are evaluating executive teams and upleveling some members to increase the chance of success.

“We have seen a surge in demand across the board in our client base and in particular among private equity firms with value creation plans oriented around portfolio company growth.”

Which roles have been most in demand and the toughest to fill?

We are seeing increases in demand in all functional roles. But in particular any functional role that directly touches revenue is seeing a major spike in demand these days. In some cases, this is because go-to-market leaders like CROs, CMOs, and CCSOs are struggling to execute in the turbulent market because software and SaaS spending by enterprises continues to be depressed. Overall, our clients are looking for leaders who know how to deliver capital-efficient growth that increases revenue and profit at the same time. Those can be challenging searches for a typical recruiting firm to solve. But our data-driven process, functional focus, and sector specialization are optimized to find these leaders and find them fast.

What do you anticipate for the search sector for the remainder of the year and looking forward?

There are early signs of a resurgence of deal flow in private equity and we expect that to accelerate in the second half of the year. The valuation expectations gap between buyers and sellers has narrowed. So we expect to see new platform buys as well as add-on M&A. For search firms that follow the traditional, old school models, this will bring a little bit of relief I am sure. We’re positioned to continue to outperform as deal flow increases.

Related: Private Equity’s Top Value Lever: Outside Talent

Contributed by Scott A. Scanlon, Editor-in-Chief and Dale M. Zupsansky, Executive Editor  – Hunt Scanlon Media