The Hot M&A Market for Executive Search Expected to Continue

September 20, 2023 – Acquisitions made big news in the recruiting industry this past year, and for good reason. Outside investors caught on to the sector’s expansion potential and long growth runway ahead. Top search leaders also found ways to maximize profit (cutting back on office space helped every search firm achieve a better bottom line in 2023). That made them highly attractive to private equity firms seeking platforms they could accelerate, and scale.

The big question has been: Will M&A activity within continue its robust march forward? Significantly more U.S. chief executives plan to pursue deals compared with their global chief counterparts, according to the newly-released U.S. CEO Outlook survey from EY. A full 63 percent reported they will pursue an M&A deal in the next 12 months, much higher than the 46 percent of CEOs globally who plan to pursue M&A a year ago. This fairly robust U.S. number may in part reflect a recent easing in asset valuations as well as pent-up demand.

Private equity firms, which have slowed their deal pace in recent months, are even more likely to pursue an acquisition, with 69 percent of private equity portfolio company CEOs saying they would
pursue M&A. Across U.S. sectors, a majority of CEOs in financial services, consumer products and retail, advanced manufacturing and mobility (AM&M), and technology, media, and telecoms (TMT) plan to pursue M&A. Interestingly, joint ventures are very high on the U.S. CEO agenda: 73 percent plan to pursue JVs or strategic alliances, arguably the more recession-proof options.

The more telling survey result is the considerably larger percentage of U.S. CEOs pursuing joint ventures or strategic alliances (73 percent) — arguably the less risky option. The TMT sector is among the leaders in that measure (71 percent) after lagging in M&A intention. Even divestment plans at 44 percent — a notably high percentage — suggest that many companies will sooner right size or restructure rather than bulk up. AM&M leads in terms of divestment plans at 48 percent.

In addition, according to industry statistics, some 67 percent of business decision-makers forecast that the U.S. M&A market will continue to strengthen over the coming year. So will this M&A activity continue to drive the executive search industry. We will just have to wait and see how it all pans out.

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