Two Recruitment Leaders Discuss the Anatomy of a Merger

ZRG Partners has continued its expansion efforts by acquiring Toft Group, a smaller rival focused on the life sciences and biotech sectors. Larry Hartmann, ZRG CEO, and Robin Toft, founder and chair of Toft Group, take time out to discuss their cultures, their views of executive search and their partnership. Let’s meet the leaders behind the latest deal.

November 21, 2019 – Consolidation continues to make news in the executive recruitment sector. One firm that has been making big waves this year has been Rochelle, NJ-based ZRG Partners. In the wake of the completion of its recapitalization with RFE Investment Partners, a lower middle-market private equity firm with a long history of investing in growth companies, ZRG this year has now completed four acquisitions.

In July, ZRG acquired London-headquartered search firm Holker Watkin, which now operates as a ZRG company, focused on supporting client needs for senior-level strategy professionals on a retained and interim project basis. In June, ZRG purchased certain assets of executive search firm Fiore Global Search. One month earlier, ZRG acquired certain assets of Dowd Associates, an executive search firm focused on the financial officer space.

Most recently, it was announced last week that ZRG had acquired Toft Group, an executive search firm focused on the life science and biotech sectors, for an undisclosed amount.

Toft Group will operate as a ZRG company, focused on supporting client needs for senior life science professionals and will add depth to the existing global life sciences practice at ZRG. The transaction will add about $10 million in annual revenues to ZRG and bolster the firm’s direct presence in the global life science sector in which it maintains a strong market presence in the top tier pharma space.

With this acquisition, ZRG will report revenues anticipated to exceed $65 million in 2019 and will have over 200 team members globally to support clients in important executive recruiting and talent solutions work. Robin Toft, founder and chair of the Toft Group, will continue in her role with the firm in order to build out the business and help with the overall growth of ZRG as a senior leader.

Toft Group has a sector focus in working with early stage life science with a special niche in innovation-driven companies at the intersection of biotech and high tech. Additionally, Toft Group has a strong reputation for actively promoting diversity in recruiting. Ms. Toft is also the author of We Can, a holistic look at preparing diverse leaders for productive careers as executives and board members.

“For us, Toft Group checked several strategic boxes,” said Larry Hartmann, CEO of ZRG in a recent discussion with Hunt Scanlon Media. “First, the life sciences work they do with West Coast venture backed biotech and pharma clients was completely complementary to our team’s global life sciences work.” The second factor, he said, was location. “California is a market into itself for recruiting, and having a new, strong team in both San Diego and San Francisco will help us springboard the growth of other sectors for ZRG, including the technology area, a key growth area for the firm in 2020.” Deals are easy to find, he said, but partnering with culturally aligned leaders is even more difficult. “This is what was magic about Robin and Toft Group, which made this transaction a high priority for us.”


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Ms. Toft said this is the ideal next chapter for her firm. “We focus on doing great work for our clients and doing it time and cost efficiently,” she told Hunt Scanlon this week. “We work to deliver a slate of candidates to our clients within two weeks, which matches the speed of the VC market’s need for talent. With ZRG’s data analytics tools around Z Score and interview insights, we see two great benefits. We can help our clients make faster and more accurate hiring decisions. As we integrate the tools of ZRG into the Toft Group’s sector focus, we feel our offerings will truly be unparalleled within the industry for our clients that value quality and speed.”

Additionally, she said, “we will jointly build a female board practice across all verticals by leveraging the momentum from the significant work we’ve done in response to the CA board legislation and my newly published book for female executives, We Can. Together, we will help our clients move toward gender equality at the top because board representation by women directly correlates with profitability, innovation, and the ability to attract further diversity to organizations.”

Mr. Hartmann and Ms. Toft sat down with Hunt Scanlon Media for an exclusive inside look at their deal and to discuss future strategies for growth. Following are excerpts from those discussions.


Larry Hartmann & Robin Toft

So, tell us how this deal came about.

Hartmann: We have gotten to know Robin over the past few years, through various industry events including a few of the Hunt Scanlon Media events. Through building an open business relationship, we discovered many similarities in our cultures and views of executive search and this served as a great foundation to move our discussions into talking about a merger.

Toft: What was interesting is that both Larry and I both came out of industry and never worked for one of the larger search firms before founding our companies. As we looked at search, we both felt like the legacy approaches to the talent problems were not keeping up with client’s needs, and we wanted to create better solutions. This common view and cultural alignment of two entrepreneurs really set the groundwork for us to consider a transaction.

How did this foundation of mutual view turn into a discussion around merging?

Toft: Well, after 10 years in the business and seeing the great growth of Toft Group, we were at an inflection point approaching $10 million in revenues. Do we continue to build and scale or do we partner with a firm to allow our team to focus on continuing to do great work in the life sciences and healthcare high tech areas? After engaging an investment banker and going through a rigorous and time consuming process, the cultural alignment with ZRG was exceptional, and it made our decision to pursue a transaction with them an easy one for me.

How does this fit into your plans for growth, Larry?

Hartmann: Our plans for growth include continuing to hire 10 to 15 managing directors a year globally, which will contribute to strong organic growth but also, with our fresh capital from our PE partner, RFE Investment Partners, look at two to three strategic acquisitions per year. For us, Toft Group checked several strategic boxes. First, the life sciences work they do with West Coast venture backed biotech and pharma clients was completely complementary to our team’s global life sciences work. The second factor was location. California is a market into itself for recruiting, and having a new, strong team in both San Diego and San Francisco will help us springboard the growth of other sectors for ZRG, including the technology area, a key growth area for the firm in 2020. Deals are easy to find, but partnering with culturally aligned leaders is even more difficult. This is what was magic about Robin and Toft Group, which made this transaction a high priority for us.

Robin, how do you see your firm now as part of ZRG going forward?

Toft: First off, we focus on doing great work for our clients and doing it time and cost efficiently. We work to deliver a slate of candidates to our clients within two weeks, which matches the speed of the VC market’s need for talent. With ZRG’s data analytics tools around Z Score and interview insights, we see two great benefits. We can help our clients make faster and more accurate hiring decisions. As we integrate the tools of ZRG into the Toft Group’s sector focus, we feel our offerings will truly be unparalleled within the industry for our clients that value quality and speed. Additionally, we will jointly build a female board practice across all verticals by leveraging the momentum from the significant work we’ve done in response to the California board legislation and my newly published book for female executives, We Can. Together, we will help our clients move toward gender equality at the top because board representation by women directly correlates with profitability, innovation, and the ability to attract further diversity to organizations….It simply makes sense!

“In many ways, integration started two and a half years ago when we met. We have been talking about what it would be like to work together and combine our two firm’s strengths and now we are well into that plan.”

Discuss integration.

Hartmann: In many ways, integration started two and a half years ago when we met. We have been talking about what it would be like to work together and combine our two firm’s strengths and now we are well into that plan. From a practical standpoint, Toft will be a ZRG company and by the end of 2020, we will be seamlessly one firm in all respects as we merge systems and processes. Our teams are already working closely together from the first day of closing the deal.

Toft: What is great is the plans call for truly adopting the best practices of both firms and applying them to the work we are doing in the life sciences sector. The team at ZRG has done this many times and we see seamless integration for our clients with adding the additional horsepower of ZRG as appropriate. Our new ability to partner with their functional experts like Wendy Murphy in the HR area and Smooch Reynolds in the investor relations area will add tremendous expertise for our clients.

What word of advice would you give to other search firm founders who might be considering a merger or sale?

Toft: Most importantly, you have to think about what life will be like after a merger and would the culture and personalities align. If you build a good company with a skilled team and strong profitability, which we did at Toft, you will have many options. Choosing the right partner goes well beyond pure economics in my mind.

Hartmann: For search firms that are passionate about the work they do but do not want to go through the challenges of raising money to grow and building out a deep management team, an acquisition could be a great route to consider. For our deals, the owners typically see that trading out equity in their firm for equity in a company that is rapidly growing like ZRG, that already has capital, makes more sense. It just depends on where the owners are and what they want to do. We don’t buy search firms with owners retiring so the planning process for owners needs to be years ahead of any planned personal exit.

Contributed by Scott A. Scanlon, Editor-in-Chief; Dale M. Zupsansky, Managing Editor; and Stephen Sawicki, Managing Editor  – Hunt Scanlon Media

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