Executive Search Firms Shatter Growth Records as Surge Into 2022 Intensifies

April 15, 2022 – SHREK firms added $2 billion in global revenue in 2021, reporting $6.5 billion in professional fees, a 42 percent jump. In the U.S., boutique recruiters offering more bespoke industry and functional solutions, reported $2.2 billion in revenues, a 58 percent rise, shattering old records as the flight to search specialists intensifies.

Executive recruiters posted their best showing ever in 2021, powered in large part by the insatiable demand for top-flight business leaders and their direct reports. Finding change agent CEOs, forward thinking CFOs, versatile CHROs, game changing CMOs, and otherwise filling out remaining critical C-suite roles fired up unprecedented growth across the industry’s Top 50 players, and beyond.

Private equity firms and their portfolios, and emerging growth and tech sector companies dominated client rosters in 2021, providing the motherload of prosperity for search firms. Healthcare, life sciences, financial services, non-profit, and clean tech were just some of the more notable sectors fueling professional fees for search firms.

This is unlike anything we have seen in 34 years of tracking the recruiting industry,” said Erik M. Boender, vice president of market intelligence at Hunt Scanlon Media who spearheaded the data collection efforts among hundreds of search firms. Recruiters, he said, have never been busier, or more overwhelmed with work. “We anticipate another year of extraordinary growth based on early 2022 data that we have analyzed,” he said.

Growth planning and expansion strategy, said Mr. Boender, is now Job 1 for recruiting leaders who just two years ago were staring down the barrel of a potentially crushing pandemic.

Meteoric Rise

According to data analysis conducted by Hunt Scanlon, 48 of the 50 largest U.S. recruiting firms enjoyed double digit growth in 2021. No. 6 ranked True Search was recognized as the fastest growing search firm among the 35 largest talent providers. It reported $265 million in U.S. fees, a 132 percent rise. Outside the U.S., True chocked up $47.2 million more in fees in 2021, bringing total revenue to $312.3m for the year. It is a meteoric rise for a search firm established just 10 years ago.

To help power its growth, True paired up with Philadelphia-based private equity firm LLR Partners last spring. It used some of the capital raised to acquire clean-tech search specialist Hobbs & Towne six months later. M&A activity is rampant across the recruiting sector and is expected to dominate headlines well into 2025.

Private equity firms now sponsor four of the Top 10 U.S. search providers, among them: Diversified Search Group (up 44 percent), ZRG Partners (up 97 percent), and Klein Hersh (up 86 percent), in addition to True. High growth rates, new layers of incremental revenue streams, and the opportunity to develop technology platforms to further turbocharge search volume, and the associated revenues that come with it, have created a perfect storm for PE investors who view search firms as a singular investment of choice.

$2 Billion Windfall

The 50 largest U.S. recruiting firms produced record revenues in 2021, reporting $5.9 billion in fees generated. As a group, they added $2 billion in revenue in just 12 months, a 52 percent rise, shattering old records.

To be sure, market demand for talent remains red hot, in the U.S. and around the globe, and search firms are key beneficiaries. Hunt Scanlon vice president Michael S. Hawkins said that so much of the growth across the sector points in one direction: private equity. “PE-backed companies have been key business drivers for search firms,” he said, “and everyone is feeling the impact, even above and beyond the Top 50.”

Fast and Furious

“Filling PE mandates is fast and furious work,” said Tim Tolan, founder and managing partner of The Tolan Group, a dedicated healthcare services/healthcare tech talent provider that has zeroed in on working with midcap private equity firms. Tolan Group is at the vanguard of a slew of small, nimble recruiting firms that are growing feverishly just under the radar of their Top 50 rivals.

One unintended consequence of all the growth is that search capacity and assignment volume problems plagued recruiters 2021, creating a backlog of searches that is expected to persist well into 2024. And that is creating an unexpected – some say long overdue – silver lining for recruiters. Clients are reporting upward pressure on professional search fees.

Delivering the Future

For Constantine Alexandrakis, who was appointed CEO at Russell Reynolds Associates in January, last year was nothing short of spectacular. The firm enjoyed a 52 percent revenue increase in its Americas business, while globally it was up 49 percent to just over $1 billion. According to Mr. Alexandrakis, the firm’s core search business soared, while advisory work increased by 30 percent. “We are very proud of the unprecedented success we had as a firm and the incredible work our consultants delivered to our clients,” he noted. All sectors delivered solid growth last year, he said, “with particular strength seen in our financial services and technology sector” practices.

As a group, the SHREK firms, as they are colloquially known, added nearly $2 billion in global revenue in 2021, reporting $6.5 billion in professional fees, a 42 percent jump. Each of the Big 5 firms exceeded $1 billion in revenues and all enjoyed growth rates above 30 percent.

Emboldened to Grow

ON Partners, which reported revenues of $56.5 million, saw its business climb more than 80 percent [see Spotlight, page 6].

“2021, qualitatively, was an incredible year,” said managing partner Tim Conti. Search assignment volume was at a level the firm’s partners had never seen before, he noted. While it is probably still too early to say what this year portends, he said, everything is trending in the right direction. ”2022 is going to be another incredible year, with a ton of demand and significant competition for talent,” he said, as companies continue to top-grade their teams. For ON Partners, he noted, “this is not a time to be cautious; it is a time to be emboldened to grow and to aggressively pursue new markets.”

As it does each spring, the ON Partners team gathered recently to reflect on where fresh opportunities might be found as the new year unfolds. Not surprisingly, many of the executive roles the firm predicts will be most in-demand are ones across the C-suite in which it has special expertise in filling. Among them: board directors, chief financial officers, chief marketing officers (ON Partners experienced an 80 percent increase in engagements for marketing-related executive roles last year), chief product officers (the firm saw an 86 percent rise in engagements in this functional area), operating partners, heads of customer experience, sales operations & planning leaders, heads of AI, global supply chain leaders, and logistics heads.

Leveraging Technology

“Bringing together the right executive leadership team to unlock a brand’s potential has never been more critical,” said Mr. Conti, “especially as the demand for leadership talent increases.” Assembling talent with the right mix of experience and perspectives has arguably never been more important to the success of an organization than it is right now, he added.

With a primary focus on technology, consumer, industrial, and the life science sectors, ON Partners recruits C-level and board talent for public and private companies, as well as venture capital and private equity firms. Founded in 2006, the firm’s consultants work from offices Atlanta, Boston, Chicago, Cleveland, Dallas, Menlo Park, Minneapolis, San Francisco, and New York.

For Riviera Partners, leveraging technology has become its key differentiator in a saturated market full of recruiters. The firm took on private equity partners three years ago to finance new ways to unlock a faster client recruiting reality, and to handle more volume. According to CEO Will Hunsinger, technology, data science and machine learning are the transformational tools it turns to for delivering an exponentially better experience for its clients and candidates. Riviera reported $68.7 million in revenue in 2021, a 129 percent revenue jump – making it the second fastest growing search firm of the Top 20.

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