The Up Group Receives Private Equity Funding

May 18, 2016 – U.K.-headquartered executive search firm The Up Group has secured investment from mid-market private equity firm Livingbridge as the recruiting firm targets further domestic and international growth. Exact terms of the funding were not disclosed.

Founded in 2007 by Clare Johnston, Up Group has become one of a growing number of search firms focused on finding digital leaders for their expanding client rosters. Known for its strong relationships with digital executives, entrepreneurs and investors, the firm’s global clients include VC-backed companies (Skyscanner, WorldRemit and Airbnb); PE-owned organizations (Photobox, Graze, Trainline); tech companies (Google Deepmind, JUST EAT, TripAdvisor); and somewhat more traditional corporate concerns going through digital transformation (Aviva, HomeServe, Guardian Media Group).

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.

“Our amazing clients are looking to change the world, and we are determined to do everything we can to help them. This means growing our team and opening offices in some of the key centers where we’re seeing significant demand for our services,” said Ms. Johnston. “In Livingbridge, we have found a partner who really understands, and is excited by, the opportunities ahead, and we are delighted to be working with them.”

Livingbridge has a strong track record of investing in recruitment businesses before, having partnered with firms such as Nigel Frank International, Armstrong Craven and Staffline. “We see The Up Group as precisely the sort of top talent adviser we enjoy working with given their niche market positioning, strong reputation and market leading management team,” said Nick Holder, a director in the new investments team at Livingbridge. “The business has established a very strong brand based on deep roots within, and a solid understanding of, the digital economy.”

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Livingbridge just recently announced its sale of Frank Recruitment Group, a recruiting business focused exclusively on the enterprise software market. Livingbridge invested in FRG in 2013, with the aim of helping it to expand globally and diversify. Since then, with investment from Livingbridge, Frank Recruitment Group has opened offices in the U.K., the U.S. and Australia and launched two additional high growth brands, Churchill Frank and Washington Frank.

Reaping the Benefits of Private Funding

“Other executive search firms have reaped the benefits of private funding and more deals have been rumored to be coming later this 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.” Mr. Scanlon said his firm’s latest rankings show a number of mid-sized specialist boutiques that would be ideal candidates for capital infusions. “These firms have critical investment enhancements — niche brand, intellectual property and competitive advantages — and these are the things that can institutionalize revenue streams.”

ZRG Partners completed a private equity fund raise in the first quarter of 2015 which, according to the firm’s CEO Larry Hartmann, “has provided fuel and capital to now safely execute our long term growth strategy.” He said ZRG is on pace to exceed $25 million in revenues in 2017, based on these investments.

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

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