November 8, 2022 – Acquisitions and consolidations continue to make news in the recruiting industry, with a number of notable purchases in recent months. Starfish Partners, an investment and ownership platform for niched professional and mid-to-upper management search specialists, has acquired Direct Recruiters Inc. (DRI). Financial terms of the deal were not disclosed. Current Starfish Partners organizations include search firms Kaye/Bassman International Corporation (KBIC), Full Spectrum Search Group, the Sanford Rose Associates International (SRAI) network, and Next Level Exchange (NLE).
Dan Charney and Mike Silverstein from DRI and Jeff Kaye, Karen Schmidt, and Nick Turner from KBIC, SRAI, and NLE are the members of the new board. Dan Charney said: “DRI has a long-standing relationship and has benefited from NLE’s leadership, as demonstrated by the fact that we have grown tenfold in less than a decade. We are committed to continuing this trajectory as we seek additional investment and acquisition partners. We are excited to continue to do great work for our clients and help our associates and partners reach their goals.”
“We are in the process of finalizing a couple of additional acquisitions,” said Mr. Kaye. “We anticipate those to be completed and announced later this month.”
DRI provides customized employment solutions for clients working in over 25 vertical markets. Since 1983, the firm has been recognized as a relationship-focused search firm specializing in building customized employment solutions. Its team offers contingency search, contract staffing, and retained “Direct Retention” search to source, identify, acquire, and retain top-performing professionals that elevate the success of its client organizations. DRI backs up its executive searches with a retention guarantee of its placements for one to two years. Direct Retention revolves around a thorough evaluation of candidates by DRI as well as expert independent partners. “When a client is looking to fill a key position, not only do we recruit, interview, acquire, and provide the traditional services, we take it to the next level and offer a full solution using data and analytics to ensure the right fit and retention,” said Mr. Charney.
“Starfish Partners is securely positioned to provide access to capital, liquidity, and potential equity in our highly fragmented market. We are on a journey of doing what has never been done in our industry,” said Mr. Kaye. “We are committed to delivering value for our combined 50-plus owners, 200-plus associates, 170-plus SRAI offices and 1,000-plus NLE clients while doing challenging and meaningful work with people who inspire us to be the very best versions of ourselves.”
“With this expansion, the combined operational, finance, technology, marketing communications, hiring, training, coaching, and consulting divisions now represent the largest and most tenured team serving the third-party recruiting industry,” said Mr. Turner. “We are thrilled to welcome new members to our corporate and executive team.”
“We have built deep and trusting relationships with DRI over the past decade, and our partnership represents a strong cultural alignment between our organizations and a shared view on the future direction of our industry,” said Ms. Schmidt. “Every SRAI network member and every NLE client will have even more support, trusted partners, and overall opportunities as a result of the combination of forces.”
The acquisition will allow all entities and future investments the ability to serve clients more efficiently, maximize full growth potential, and secure continuity of what the founders have built, said Starfish Partners. With an industry of over 25,000 independently owned and operated recruiting firms, Starfish Partners said it is actively pursuing aggressive growth that will be achieved through a variety of mergers, acquisitions, and capital infusion activities.
Starfish Partner recently acquired Full Spectrum Staffing Solutions, a long-time client of Next Level Exchange founded by Maxwell McNamara. “I founded Full Spectrum in 2016 and though we experienced steady growth until 2019, Full Spectrum joined Sanford Rose Associates and we have worked together to evolve the firm from the typical rainmaker model to a decentralized, scalable, data-centric organization that is poised to scale,” Mr. McNamara said.
Bullhorn, a provider of software to recruiting firms, has launched Bullhorn Ventures, a dedicated corporate venture capital resource that will invest in and partner with high-potential, early-stage companies focused on helping staffing and recruiting firms improve operational efficiency and boost top-line growth. Bullhorn Ventures will launch initially with $20 million allocated for investments.
The recruiting industry is going through unprecedented change as employment bounces back from lows during the pandemic. Search firms are challenged by the growth of online talent platforms, rising expectations from talent set by the consumer digital experience, and market growth, which has put a premium on talent acquisition. “Bullhorn has long been a technology innovator for the staffing industry and will continue to advance and innovate on the Bullhorn platform to help customers solve their most pressing challenges,” the company said. “In addition, Bullhorn Ventures will look to invest in startups that uniquely address these challenges and others, helping firms navigate and grow in the current environment.”
“The acquisition by Starfish Partners allows us to invest back in the firm at an accelerated rate, providing resources that otherwise wouldn’t have been possible without the collective,” he said. “But my most important ‘why’ of all? The people. Starfish Partners will allow us to attract more talent, provide an exceptional value proposition for our recruiters, and create unparalleled career opportunities for all,” he added.
Starfish Partners was launched earlier this year as an ownership/investment platform for the executive search market. The platform, according to its founder, was formed to allow owners to scale and monetize their business value; it will also allow independent search firm owners to participate and share in the equity of an entire family of companies, not just their own. “As the search and staffing industry has evolved, it has consolidated in most areas,” said Mr. Kaye. “We see small staffing firms acquired by regional players acquired by national ones. We see giant holding companies owning a variety of organizations operating under many unique brands. We see mergers on both small and large scales,” he said.
“The executive search industry has had a flurry of merger and acquisition activities over the years, but there is one segment of this massive world that has remained relatively untouched: the world of niche professional and mid-upper-level management search specialists,” Mr. Kaye said. “The barriers to entry are low, but the obstacles to growth are significant. There are understandable issues and reasons why investors have avoided this robust section of the market,” he noted.
Contributed by Scott A. Scanlon, Editor-in-Chief; Dale M. Zupsansky, Managing Editor; and Stephen Sawicki, Managing Editor – Hunt Scanlon Media