Advancing FinTech: Introducing Our Comprehensive Sector Coverage

by Eric Walczykowski, Peter Lawrence, Daniel Zhang | Jul 25, 2024 | Blog

Advancing FinTech: Introducing Our Comprehensive Sector Coverage

By Eric Walczykowski, Peter Lawrence, Daniel Zhang

The financial technology (FinTech) sector has rapidly evolved from its early days as a niche within financial services to a powerhouse driving innovation across the industry.

Executive leadership within FinTech is crucial for navigating this dynamic segment, where staying ahead of technological advancements and market trends can make or break an investment thesis.

At Bespoke, we have a proven track record of placing transformative leaders in every subsector of financial technology, including commercial banking, investment banking, asset management, capital markets, payments, and more.

For financial technology companies poised for the next exciting stage of growth, our data-driven search process and market-best networks means we can consistently deliver executives who will execute the right strategies and generate substantial value.

Financial Technology Sector

When looking at annual equity funding and deals within FinTech over the last few years CB Insights paints a story that seems to mirror most other markets. The data shows a remarkable peak in 2021 with 6,000 + deals closed totaling $140 billion in funding. 2022 saw a similar deal volume, but with funding plummeting to $479 billion. The declining trend was confirmed in 2023 with deal volume almost cut in half and funding landing at $39 billion.

According to a Biannual analysis of global FinTech funding from KPMG,

The payments space continued to account for the largest share of funding among the FinTech subsectors, despite a drop from $57.9 billion to $20.7 billion between 2022 and 2023. Of the major FinTech subsectors, only PropTech and InsurTech saw total investment rise year-over-year, with PropTech investment rising from $4.1 billion to $13.4 billion, and InsurTech investment growing from $5.9 billion to $8.1 billion. From a technology perspective, despite a drop in funding in 2023, AI remained a clear leader, attracting over $12.1 billion in FinTech investment.

This is consistent with what we are seeing here at Bespoke, with a great deal of our FinTech placements being for payments-related software companies.

Daniel Zhang and Peter Lawrence, Senior Research Analysts tracking the FinTech market for Bespoke, said,



The FinTech sector is dynamic and ever changing. Right now, we are seeing tremendous growth in subsectors like blockchain, as well as a large diversity in end users. The technology our clients create is amplifying the operational capacity for large international banks making billion-dollar transactions down to payroll software being used by a family-owned business. With Bespoke’s depth of experience in FinTech we’ve had the privilege of running searches across every scale of business and vertical application.

2024 Outlook & Predictions

As we look ahead to 2024, several key trends and predictions are shaping the future of the FinTech landscape. Our insights indicate a few dominant themes that will impact the sector significantly:

Consolidation of FinTech Players

Bundling services as competition increases and capital availability decreases
Fewer players survive and adobe best-in-class features

Increased blockchain applications for consumers and businesses

Wider adoption of blockchain technology by companies seeking efficiency
Crypto to serve as a settlement layer for various business and consumer use cases

Impact of economic factors

Rising inflation rates influence borrowing costs and consumer behaviors
Expect more credit offerings and increased upfront payments in services like ‘buy now, pay later’

These predictions underscore the dynamic and evolving nature of the FinTech sector, highlighting the opportunities and challenges that lie ahead. We are excited to provide our clients with unparalleled access to top-tier leadership that can navigate and capitalize on the opportunities within the dynamic FinTech landscape.

Track Record

To date, Bespoke-placed executives within FinTech have created roughly $20 billion in enterprise value, and we have completed over 90 placements in this vertical. Our placements have spanned every executive function, and our client Net Promoter Score (NPS) for this segment is a near-perfect 9.6 out of 10.

We have worked with top PE firms on FinTech searches including Thoma Bravo, Clearlake Capital, EQT, GSV, Insight Partners, as well as public companies. Our experience proves a strong track record in both enterprise and SMB solutions.

We enable innovative organizations serving the financial sector with leaders who adopt cutting-edge technologies to enhance competitiveness and promote capital-efficient expansion.

$20B

Enterprise Value Created

90+

Executive Placements

9.6

NPS by Our Clients

Functions Placed

CEO, CRO, CPO, CMO, COO, GM, CTO, and CAO

For more information on transformative leaders in Finance Technology please visit:

https://www.bespokepartners.com/finance-tech-recruiting

Bespoke Partners Named in Top 10 of the “Top 49 Retained Executive Search” 2-Years Running by C-Suite CV Secure.

top 49 search firms 2 years in a row - bespoke partners

Author:
Eric Walczykowski
Chief Executive Officer

Eric is passionate about building high-performing teams that value doing their best, working together, overcoming adversity and learning.

As a proven growth executive, Eric has served as CEO, President, Board Member, Investor and Advisor for technology companies that achieved over $4.5B in successful exits.

Eric brings to Bespoke Partners significant professional services experience from Deloitte and Andersen, as well as the high-growth client executive perspective for private equity-backed technology companies.

Eric earned an MBA from the Kellogg School of Management at Northwestern University and a BS in Business from Fresno State University.

Outside of work, Eric enjoys spending time with family, coaching baseball, travel, attending live events and sipping good wine.

Author:
Peter Lawrence
Senior Research Analyst

Peter is a Senior Research Analyst on the Search team at Bespoke and based in Boston.

Prior to Bespoke, he worked for RevelOne as a Senior Research Analyst, where he identified top GTM leaders for tech-enabled startups. Peter also previously worked in academic research, studying genetic components of aging and surveying undergraduate mental health.

Peter has his bachelor’s degree in psychology from Middlebury College.

In his spare time, you can find Peter reading, skiing, or playing Quadball.

Author:
Peter Lawrence
Senior Research Analyst

Daniel was born in Toronto and raised in Seattle where he spent 22 years of his life. He graduated from the University of Washington with a degree in Business Administration and moved to San Diego shortly thereafter to pursue a Master’s degree at the University of San Diego.

Prior to Bespoke, Daniel was an Analyst at Spencer Stuart where he led research efforts for clients ranging from Fortune 500 companies to high-growth startups. He then transitioned into the private equity space at Mainsail Partners where he was responsible for building out the executive leadership teams for their portfolio companies.

In his free time, Daniel enjoys backpacking, rooting for Seattle sports teams, and producing social media content for the mixed martial arts community.

Navigating Q3 CEO Hiring and Market Trends

by Katherine Baker | Jul 18, 2024 | Blog

Navigating Q3 CEO Hiring and Market Trends

Authored By Katherine Baker

A CEO’s role is undeniably crucial in guiding a company toward growth, fostering a successful culture, and achieving value creation objectives. Bespoke is proud to be their premier leader in CEO placements for private equity-backed software and SaaS firms for over a decade.

Our placed candidates have generated $26.4 billion in enterprise value and led over 38 successful company exits, underscoring the quality and impact of our executive placements.

Compensation and Equity

Our analysis of confirmed compensation packages for executives at 332 public or privately held software and SaaS companies reveals significant variation in On Target Earnings (OTE) based on company revenue and employee count.

As expected, OTE figures rise in tandem with company revenue:

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CEOs, given their critical role in shaping a company’s vision and driving strategic initiatives, are understandably the highest-compensated leaders within their organizations. As companies expand in scope and complexity, the impact of experienced CEOs becomes increasingly significant, reflected in their substantial compensation packages.

Equity Incentives: Aligning Performance with Strategic Goals

Equity incentives are a crucial component of compensation packages for C-suite executives, aligning their performance goals with the company’s strategic objectives and providing significant liquidity opportunities upon successful achievement of those goals. For CEOs, equity packages typically form a substantial portion of their annual OTE, especially when tasked with ambitious investment theses.

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Our data indicates that CEOs can earn up to 20 times their OTE in projected equity payouts. This substantial equity component is a powerful tool to attract top talent and drive successful business outcomes.

CEO Trends: Adaptations and Market Dynamics

Increased Founder Transitions:

We continue to observe an abundance of founder transitions, particularly in smaller companies entering the growth stage. Private equity firms often prefer proven operators who can rapidly achieve investment theses, either by replacing founders with experienced CEOs or by surrounding founder-CEOs with seasoned operators and advisors.

Involvement at Every Level:

CEOs are increasingly involved in the fundamentals of their organizations, overseeing projects they might have historically delegated. They delve into financials, understand the entire client pipeline, and scrutinize business metrics to manage performance effectively.

Candidate Supply and Market Trends

The current market for CEOs is tight, requiring a proactive and strategic approach to identify and engage top talent.

We focus on executives stepping into CEO roles for the first time, particularly those with proven experience as Presidents or General Managers with P&L responsibility. While some companies elevate CROs to CEOs, others seek candidates with comprehensive operational and financial oversight experience.

Top CEO candidates are often involved in multiple discussions with prospective employers, making a strong initial impression crucial.

Personal engagement through in-person meetings and genuine courting efforts are key to securing preferred candidates. There is also a trend of CEOs from smaller companies moving to larger organizations for increased complexity, wealth creation potential, and more significant challenges.

Market Trends

Increased Mobility and Return-to-Work Dynamics:

Companies are granting CEOs the autonomy to decide on return-to-work policies, balancing remote and in-office work to meet organizational needs. CEOs must be adaptable, ready for frequent travel, and accessible to both employees and customers.

Shift Towards Vertical Software Solutions:

There is a significant shift towards vertical solutions tailored to specific industries like finance, healthcare, and retail. Investors seek CEOs with experience in growing companies within these verticals.

Public-to-Private Leadership Transitions:

More top executives are moving from public companies to private equity-backed environments. This transition requires an understanding of private equity structures, and CEOs from public companies bring a disciplined operational approach valued in private equity settings.

CEO Turnover

The Q4-23 Turnover Index for CEOs was 2.9, up from 2.2 in the previous quarter. Market challenges and depressed corporate spending have led companies to evaluate leadership performance and up-level positions directly impacting revenue and growth. As markets tighten, CEO turnover increases, reflecting the need for new leadership to navigate challenging conditions.

TURNOVER INDEX BY ROLE, QUARTERLY CHANGE (1)

Find out more about CEO turnover trends and their implications in our latest report. Download your version today.

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Want to learn more about Bespoke Partners CEO leadership insights?

Head to bespokepartners.com/ceo-trends-saas-software-talent-report to download your free report.

Contact our CEO Practice Team to find out how we can help navigate your next CEO hire.

katherine.baker@bespokepartners.com

Bespoke Partners Named in Top 10 of the “Top 49 Retained Executive Search” 2-Years Running by C-Suite CV Secure.

Author:
Katherine Baker
Partner

Based in Bespoke’s San Diego office, Katherine co-leads the CEO practice and is a GTM practice expert to help build the executive teams for private equity backed software and technology companies. Over the last 6 years Katherine has completed over 100 searches for firms such as WCAS, Francisco Partners, Clearlake Capital, Insight Partners, TA Associates, Providence Equity, and more.

Prior to joining Bespoke in 2017, Katherine focused on recruiting Finance executives across all industries including SAAS, Biotech, Energy, and Defense from Fortune 500 companies to start-ups. She has led dozens of placement searches that have resulted in portfolio company exits, and billions of dollars of total transaction value creation.

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Path to Exit: Ensuring Leadership Readiness in PE Portfolio Companies

by Eric Walczykowski | Jul 10, 2024 | Alliance, Blog

Path to Exit: Ensuring Leadership Readiness in PE Portfolio Companies

Authored By Eric Walczykowski

Many firms are currently facing the urgency of portfolio bloat and the need to expedite exits to reinvigorate their investment cycles. When we think of a successful and lucrative exit within private equity, we know it requires more than just strategic foresight; it demands a robust and agile leadership team ready to meet the challenges head-on.

I recently sat down with Matt Richburg (Managing Partner, Ampersand Leadership Group) to discuss the essential steps and considerations for CEOs to effectively prepare their teams, ensuring not only a smooth transition but also the maximization of value during the exit process.

Below is a summarized Q&A of my conversation with Matt.

Eric: With many firms needing to exit portfolio companies within the next 12 months, what steps should a CEO take to ready their team for this critical process?

Matt: It’s crucial to have the right foundation, starting with the end in mind. Preparing the team involves understanding their readiness, especially the top team, which includes the CEO, CFO, Head of Business Development, and CRO. However, it’s equally important not to overlook the entire organization. The exit process can erode value if not managed well. This includes ensuring readiness for the extensive diligence process and roadshows that put significant stress on various functions. More clients are now formally assessing their readiness to identify hotspots and areas needing additional support, both at the top and throughout the organization.

You can see the full interview with Matt in our Tailored Talent vodcast series, here.

Watch the Full Interview

Eric: : I agree, it’s vital to understand both the team and the value we’re presenting to the next private equity buyer. How would you assist in preparing my team for this process?

Matt: We usually start with a leadership health check, assessing the team’s readiness for the exit journey. This involves understanding the end game, timeline, key value drivers, and roles. Through candid conversations and surveys, we gauge readiness across several factors, including talent, change management, and cultural implications. This helps create a thoughtful action plan to address areas needing support. For example, if the FP&A team is already stretched, we might suggest hiring or borrowing consultants to manage the increased workload during the exit process.

preparing for an exit - leadership team readiness

Eric: In my experience, one of the biggest challenges is managing the mental readiness for the diligence process. How do you prepare teams for this intense phase?

Matt: It’s essential to prepare not only for the business aspects but also for the emotional components. The diligence process is thorough, challenging every aspect of the business, which can lead to high tensions, especially for founders with significant net worth tied up in the deal. Emotional preparation involves being ready to face scrutiny and criticism constructively. Starting these efforts early, ideally from the day the asset is bought, lays a strong foundation for the eventual exit.

Eric: As we consider exiting to a private equity firm, how can I identify the critical roles for the next phase of value creation?

Matt: Identifying critical roles is highly specific to your situation and value creation plan. It’s essential to unpack your investment thesis and value creation plan to pinpoint the key drivers. Whether it’s a technology play requiring a strong CIO/CTO or a go-to-market strategy needing a top CRO, understanding these priorities upfront is crucial. Sometimes, the most critical role could be a CHRO who drives change management and talent assimilation.

preparing for an exit - emotional and strategic preparation for diligence

Eric: How do you manage changes at critical leadership levels without disrupting the value creation journey?

Matt:

Honest and candid evaluations are essential to determine current capabilities and future needs. Tough decisions must be made decisively and empathetically. Successful organizations make these calls with clarity, ensuring that the right talent is in place for future growth. Building a pipeline of future leaders involves identifying signs of potential and providing opportunities for them to stretch and grow, ensuring they are ready for future challenges.

Eric: From my conversation with Matt, it is clear to see that the preparation of a leadership team goes beyond mere readiness for the business aspects; it encompasses emotional resilience and strategic foresight.

The insights shared by Matt underscore the importance of a holistic approach to leadership readiness, ultimately setting the stage for sustained growth and success in the competitive landscape of private equity.

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Bespoke Partners Named in Top 10 of the “Top 49 Retained Executive Search” 2-Years Running by C-Suite CV Secure.

About Ampersand Leadership Group

Ampersand Leadership Group supports private equity, CEOs, and Boards in selecting, developing, and aligning top talent to drive growth and investor returns.

Connect with Ampersand to learn more:

Contact Us

About Bespoke Partners

Bespoke Partners is the largest recruiting firm solely focused on software and SaaS companies, and we specialize in firms backed by private equity sponsors. Bespoke Partners can help companies seize emerging opportunities by staying ahead in the software and SaaS leadership market.

Connect with Bespoke Partners to learn more:

Contact Us

Author:
Eric Walczykowski
Chief Executive Officer

Eric is passionate about building high-performing teams that value doing their best, working together, overcoming adversity and learning.

As a proven growth executive, Eric has served as CEO, President, Board Member, Investor and Advisor for technology companies that achieved over $4.5B in successful exits.

Eric brings to Bespoke Partners significant professional services experience from Deloitte and Andersen, as well as the high-growth client executive perspective for private equity-backed technology companies.

Eric earned an MBA from the Kellogg School of Management at Northwestern University and a BS in Business from Fresno State University.

Outside of work, Eric enjoys spending time with family, coaching baseball, travel, attending live events and sipping good wine.

Featuring:
Matt Richburg
Managing Partner
Ampersand Leadership Group

About Matt

Ampersand Leadership Group supports private equity, CEOs, and Boards in selecting, developing, and aligning top talent to drive growth and investor returns. Matt collaborates with clients that span the globe and invest across a rich variety of industries including financial & professional services, healthcare, technology, media, consumer goods, chemicals & industrials, and education.

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Strategic Exits: How CFOs Shape the Future by Preparing the Past

by Eric Walczykowski | Jul 2, 2024 | Alliance, Blog

Strategic Exits: How CFOs Shape the Future by Preparing the Past

Authored By Eric Walczykowski

Many in the private equity sector are gearing up g for a potential surge in M&A and exits later this year. Overpopulated portfolios are creating pressure for exits and preparations are underway in many companies.

I sat down recently to discuss this with Nick Leister, Private Equity Director for CrossCountry Consulting, one of our alliance partners delivering integrated solutions for the office of the CFO.

Here is a summarized Q&A of my conversation with Nick about exit readiness strategies for Executives, specifically the CFO.

CrossCountry is a valuable alliance partner of Bespoke Partners, particularly as it relates to our financial officer’s practice. Today, we’re going to talk about how the right CFO can create maximized value during an exit. This is a particularly important topic as we think about 2024 and the focus is on exits for private equity firms.

Eric: Nick, what are some of the diligence requirements you guys are seeing from buyers that should act as a guide for those who are looking to sell when the market picks up?

Nick: Currently, we’re seeing a significant uptick in diligence requirements in the market, with buyers digging deeper into diligence processes and demanding more from management teams. This heightened scrutiny necessitates the provision of clean and robust data sets, both current and historical, which are crucial for financial modeling and Quality of Earnings Verification (QEV) efforts. In the software and SaaS sectors, focus areas include the Annual Recurring Revenue (ARR) snowball, where buyers are keen on a detailed analysis that covers price increases and churn rates to net and gross retention calculations. This depth of information helps buyers grasp the business trends fully and build confidence in the company’s trajectory. For businesses that have grown through acquisitions, it’s crucial to standardize key metrics on an apples-to-apples basis for accurate comparison and analysis. This often requires management teams to revisit, recalculate, and redefine these metrics to ensure they’re consistently presented. Highlighted metrics such as new logo and renewal bookings, along with headcount and key vendor expenses, are areas of scrutiny. Additionally, strong support for any EBITDA adjustments is vital—gone are the days when ad-backs could be assumed correct without question. Now, a detailed schedule is necessary to justify these adjustments transparently to potential buyers, showcasing the need for each modification.

Eric: If I’m thinking about going to market, preparing for diligence and trying to get the buyer’s eye, how much time ahead would I need to engage a firm like yours to be in best stead for that acquisition?

Nick: Twelve to eighteen months is an ideal timeline to start a sell-side readiness project. It gives you time to do the right preparation in terms of cleaning up the data, analytics to support the kind of key questions that you’re expecting from buyers. And have good answers for when you approach the market on the business trends. It also gives you time to adjust in the business where you can adjust around expenses, trends and sales and get ahead of the story. So, when you go to the market, there’s a clean EBITDA for the last 6 to 12 months. where you can point to and say, this is a true run rate of where the business is going. And you have the clean data set and analytics to support that trend, thus making it less likely a buyer is going to have issues with any of the reported financials you’re presenting.

You can see the full interview with Nick in our Tailored Talent vodcast series, here.

Watch the Full Interview

Eric: One of the key things that someone like you brings from the outside is not only your expertise in the subject matter, but you’re doing acquisitions or acquisition readiness repeatedly.And so, as you’re putting that together, you can help me with that critical lens, wouldn’t you say?

Nick: I think where we approach it from is really trying to take that outside-in view of here’s where we’re seeing other buyers in the market digging in. Here’s where you want to make sure you have the right level of granularity, the right level of support as you go to market. And really being the ones who were putting people in place who have done this over and over again and provide that really kind of additional arms and legs for the CFO to feel comfortable going through the process. The aim is to work closely with third parties towards the successful execution of a transaction, recognizing there’s lots of parties involved, as well as still having to manage the day to day of the business. It’s important to have the right person sitting next to the CFO, helping to drive that process while knowing the CFO is the overall owner of this process.

It's important to have the right person sitting next to the CFO, helping to drive that process while knowing the CFO is the overall owner of this process.

Eric: When we think about the interplay between the CFO and the Project Management Office (PMO), talk to me a little bit about the roles in the acquisition preparation and acquisition process.

Nick:

The CFO is central to driving the transaction process, owning the preparation of financials, analysis, and the communication of the equity story to investment banks and potential buyers. Over the 12 to 18 months leading up to a transaction, the CFO is pivotal in crafting the roadmap, addressing critical issues, and setting priorities while providing vision for the function and ensuring the right support for the transaction. Additionally, the CFO manages day-to-day activities, contributing significantly across various areas. The PMO plays a crucial role as the right-hand person, driving the day-to-day execution of the roadmap in deal preparation. This includes supporting key analyses, managing reporting requirements to anticipate buyer inquiries, preparing for data room needs, and handling accounting diligence reports before going to market. Furthermore, the PMO is instrumental in coordinating with all third parties involved in the transaction, from Quality of Earnings providers to investment banks. This role ensures that all parties receive the necessary information promptly, maintaining the overall process flow and ensuring that internal and external coordination keeps the transaction on track.

Eric:The coordination and data gathering involved can easily be underestimated, making additional resources invaluable. This allows the CFO to concentrate on steering the process effectively, rather than getting bogged down in the minutiae. What are the risks if you don’t have the right folks in the role and what can you do to mitigate that during the process?

Nick:

The human element is vital in business processes, especially in sales where strong leadership is crucial for managing the extensive time and effort required. These processes are typically large-scale, carrying significant risks that can impact other business activities if not managed well. Competent leadership is essential to avoid prolonging these processes and exacerbating risks, ensuring that other areas of the business are not negatively affected. Leaders not only drive the sales process but also manage other significant projects and initiatives across the company. Without sufficient support, these initiatives could suffer from delays and increased stress, potentially postponing critical projects due to insufficient bandwidth to effectively manage and support them. Additionally, focus and organization are paramount, particularly through strong support roles such as a controller, FP&A lead, or a third-party PMO. These roles are critical for organizing and presenting information clearly to make a stellar first impression on potential buyers. A well-structured presentation significantly affects how investor’s view and interact with the business. Moreover, if leaders lack experience with transactions, it can introduce inefficiencies, further prolonging the process and driving up costs due to unfamiliarity with the necessary responses to transactional challenges.

Looking to hire an exceptional CFO?

Find additional information on Bespoke’s CFO practice here: High-Impact Finance Executives – Bespoke Partners

Eric: When I think about this conversation today, it was so timely given the focus on exits this year and just about the M&A process in general.

There are tens to hundreds of millions of dollars at stake and preparation is so important. Not only in maximizing value, but I think both you and I can agree on our experience of doing deals in some cases even getting the deal done and showing that you’ve got your act together you’re an asset that’s top grade and worth pursuing.

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Bespoke Partners Named in Top 10 of the “Top 49 Retained Executive Search” 2-Years Running by C-Suite CV Secure.

Want to learn more about Bespoke’s industry leading search services for finance executive search?

Head to https://www.bespokepartners.com/high-impact-finance-executives/ for more information and contact our Finance Practice team to find out how we can help navigate your next CFO hire.

About CrossCountry Consulting

A leading provider of specialized finance, operations, and technology advisory services, CrossCountry Consulting partners with Fortune 500 companies, emerging growth market leaders, and private equity sponsors, and excels in solving today’s most pressing challenges and creating future enterprise value.

Connect with CrossCountry Consulting to learn more:

Contact Us

About Bespoke Partners

Bespoke Partners is the largest recruiting firm solely focused on software and SaaS companies, and we specialize in firms backed by private equity sponsors. Bespoke Partners can help companies seize emerging opportunities by staying ahead in the software and SaaS leadership market.

Connect with Bespoke Partners to learn more:

Contact Us

Author:
Eric Walczykowski
Chief Executive Officer

Eric is passionate about building high-performing teams that value doing their best, working together, overcoming adversity and learning.

As a proven growth executive, Eric has served as CEO, President, Board Member, Investor and Advisor for technology companies that achieved over $4.5B in successful exits.

Eric brings to Bespoke Partners significant professional services experience from Deloitte and Andersen, as well as the high-growth client executive perspective for private equity-backed technology companies.

Eric earned an MBA from the Kellogg School of Management at Northwestern University and a BS in Business from Fresno State University.

Outside of work, Eric enjoys spending time with family, coaching baseball, travel, attending live events and sipping good wine.

Featuring:
Nick Leister
Director, Private Equity
CrossCountry Consulting

About Nick

Nick brings a wealth of expertise from CrossCountry Consulting, a leading provider of specialized finance, operations, and technology advisory services. With a track record of partnering with Fortune 500 companies, emerging growth market leaders, and private equity sponsors, CrossCountry Consulting excels in solving today’s most pressing challenges and creating future enterprise value. Nick’s extensive experience in areas such as accounting and risk, technology-enabled transformation, and transaction solutions makes him an invaluable resource for understanding the intricacies of preparing for a successful exit.

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AEA Growth Interview: Changing Markets & New Tech Shakeup Executive Recruiting

by Eric Walczykowski | Jun 27, 2024 | Blog

AEA Growth Interview: Changing Markets & New Tech Shakeup Executive Recruiting

Authored By Eric Walczykowski

Technology eventually disrupts every industry and today this is happening in executive search. Cutting-edge technology is streamlining the recruitment process, enhancing candidate matches, and predicting executive success. I recently had the opportunity to catch up with Ravi Sarin, Co-Founder of AEA Growth and a member of our board, to reflect on Bespoke’s performance thus far in 2024 along with technology trends that continue to reshape the recruitment landscape. You can see the full interview with Ravi in our Tailored Talent vodcast series, here: https://www.bespokepartners.com/tailored-talent-private-equity-talent-trends-interview-archives/ Below is a summarized Q&A of my conversation with Ravi.

Eric: What were some of the attributes that attracted you to executive search as an investor?

Ravi: AEA Growth is focused on investing in professional services companies. We’ve looked across different end markets and professional services and have had an interest in the executive search industry for many years. It’s a large industry that’s growing, as is the need for executive talent in shaping the growth of businesses. We are thinking about the opportunity cost of not having the right person in the right seat, and the value that executive search provides to an investment thesis. Even as the industry has grown, matured and scaled, they have not really taken advantage of scale benefits. What’s exciting for us as investors is to think through other models that can drive us to a better client experience, and more value for the recruiters themselves. We’ve had success working with Bespoke by investing in technology that can support better service delivery and the workflow for recruiters. What is exciting as investors, is to be able to help improve the industry for clients and recruiters.

Eric: What does tech-enablement mean to you within the context of executive search?

Ravi: There’s a lot of different avenues for applying technology in the executive search process. Technology is not going to replace the need for experienced recruiters who can be consultative to companies that are looking for talent, and to the individuals that they’re looking to recruit. Because there is a relationship and trust component, that technology cannot displace. That said, I think technology can enhance the process across every facet. Where technology can be much more transformative is when it enhances what the recruiters are doing from a workflow standpoint. This can be pattern recognition and the signals that may be valuable to say, this is the right person for this role and why, and frankly, enhance what may be intuitive with data. With Bespoke we’ve been heavily investing in those two areas. First, identifying talent through multiple sets of data in addition to the relationships that the Bespoke recruiters have established. Second, reducing the amount of time and energy spent on what I’d call lower value add activities so that there’s more time in the day to work directly with clients.

You can see the full interview with Ravi in our Tailored Talent vodcast series, here.

Watch the Full Interview

Eric: As we think about Bespoke, we’re coming off a record Q1. We’re knocking the operational milestones out of the park in terms of tech development, customer expansion and people’s experience at Bespoke. What do you think about the future of private equity in the recruiting industry?

Ravi: It’s a large industry under-penetrated by private equity today. We’re in the early stages of private equity investment in the executive search industry, but those who have invested have seen success by supporting firms in scaling and benefiting from that scale. An important aspect is the business model design. Many established firms in executive search still operate like small firms, using a broker-agent model like real estate. The bigger opportunity for private equity is to invest in models like Bespoke’s, which emphasize a team-based approach, collaboration, and high specialization.

Many firms try to serve numerous clients across various areas, spreading recruiters too thin. Bespoke focuses on software and organizes teams by functional area, ensuring recruiters are experts in both industry and function. This specialization makes recruiters more knowledgeable and effective. Private equity could greatly support this next chapter of business model design in executive search, emphasizing the overlap of industry and functional focus to achieve better client outcomes.

Eric:

Just making a sharp point on your comment around continuing to drive the work to people who are uniquely qualified to do the work. We’ve had a lot of success in the market because we support our partners with a full team. We’ve got an analyst, an industry analyst and a search coordinator in addition to technology, which again allows people to do their highest and best work. I’ve truly enjoyed partnering with you along with the team at AEA, because you really get the market, you get the industry, and you’ve just been a great thought partner as we look to disrupt the industry. I’m grateful for our collaboration and partnership.

Ravi:

We’ve been excited to partner with you and the Bespoke team. We are excited about what’s in store for not only the rest of this year, but the years to come.

Want to learn more about Bespoke’s industry leading search services for executive search?

Contact our team to find out how we can help navigate your next executive hire.

Contact Us

Bespoke Partners Named in Top 10 of the “Top 49 Retained Executive Search” 2-Years Running by C-Suite CV Secure.

About AEA Growth

AEA partners with companies to accelerate growth. Their thesis-driven, proactive sourcing strategy seeks to identify growth investment opportunities, offering a solution-oriented flexible capital approach aimed at meeting stakeholder objectives. Learn more at: www.aeagrowth.com

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About Bespoke Partners

Bespoke Partners can help companies seize emerging opportunities by staying ahead in the software and SaaS leadership market.

Connect with Bespoke Partners to learn more:

Contact Us

Author:
Eric Walczykowski
Chief Executive Officer

Eric is passionate about building high-performing teams that value doing their best, working together, overcoming adversity and learning.

As a proven growth executive, Eric has served as CEO, President, Board Member, Investor and Advisor for technology companies that achieved over $4.5B in successful exits.

Eric brings to Bespoke Partners significant professional services experience from Deloitte and Andersen, as well as the high-growth client executive perspective for private equity-backed technology companies.

Eric earned an MBA from the Kellogg School of Management at Northwestern University and a BS in Business from Fresno State University.

Outside of work, Eric enjoys spending time with family, coaching baseball, travel, attending live events and sipping good wine.

Featuring:
Ravi Sarin
Co-Head & Founding Partner
AEA Growth

About Ravi

Ravi Sarin co-leads the overall strategy and direction at AEA Growth and is a member of the AEA Growth Investment Committee. He brings a wealth of experience from his previous roles, including Founder and Managing Partner of ROCA Partners and Principal in the Private Equity Group at Ares Management, where he led investments in various sectors such as healthcare services, retail, and gaming. Ravi also has a background as a private equity investor at Bain Capital and as well holding a MBA from Harvard Business School.

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Founder Transitions & ‘The Second CEO’: Key Lessons in New Book

by Eric Walczykowski | Jun 25, 2024 | Blog

Founder Transitions & ‘The Second CEO’: Key Lessons in New Book

Authored By Eric Walczykowski

The second CEO to lead a company is a unique kind of leader, in a unique situation. There have been thousands of books written about starting a business as a founder, or being a CEO. But until now there has never been such a guide for navigating the unique challenges of succeeding a founder.

I recently sat down with Matt Sharrers (Managing Partner, ETJ Advisory) to discuss his new book “The Second CEO: Accelerating Scale When Following the Founder.” Released this month, it offers a detailed roadmap around respecting the founder’s vision while establishing one’s own culture and adding value.

You can get a copy of Matt’s book here: https://a.co/d/02lRPLig

You can see the full interview with Matt in our Tailored Talent vodcast series, here: https://www.bespokepartners.com/tailored-talent-private-equity-talent-trends-interview-archives/

Below is a summarized Q&A of my conversation with Matt.

Eric: Congratulations on the publishing of your book, “The Second CEO.” Tell me, what does it mean to be a second CEO?

Matt: The impetus and the passion behind this were there had never been a piece of work published that looked at being the second CEO of a business. When I took over for Greg Alexander, who was the first CEO of SBI, there wasn’t an operating manual that said, “Here’s what you do when the founder leaves. How do you think about culture and the way to leave your personal stamp?”

I witnessed so many conversations where I didn’t feel like the transition’s sensitivity was being considered. So, between my personal experience, and what I saw from a consulting standpoint, I felt like there was an opportunity to address a gap in the market. I spend my time now working with folks like you, Eric, who have done it multiple times. I think founders are the most amazing entrepreneurs, because nothing gets done without them. And when you are tasked with carrying on a vision, that is almost like them handing you one of their children. It’s a very, very significant responsibility.

Eric: When would you say is the right time to consider that founder transition?

Matt:

There are a few triggers that seem to be the most common.

Founder exhaustion and fatigue:
The founder has been the person to lay out the vision, drive the strategy, recruit the people, and get it to a certain point. And as a result, they’re fatigued.
Recognition of not wanting to continue
as a CEO by default:
Self-awareness of not necessarily being the professional manager who is going to run a disciplined strategy, have a set of KPIs, think more objectively and functionally about the business, but the one who enjoys crafting a business.
Wanting a well-deserved break:
After going all in and driving hard for years, they’ve now earned the opportunity to maybe take a breath, sit back, but also be their natural self and reassess their next move.

You can see the full interview with Matt in our Tailored Talent vodcast series, here.

Watch the Full Interview

Eric: Talk to me about the mindset of the founder to take on all of this. Followed by your best practices as you go about your founder transitions.

Matt:

There are a couple of use cases that can happen. You have a founder transition where the founder is self-aware and says, “I think we need someone else to take this business to the next step.” Then, as a board, we are purposeful in making sure we find someone we feel can come in and be successful.

This is opposed to a transaction where the founder says, “I’m going to be the CEO for the next five years with the private equity sponsor.” Private equity sponsor responds, “This isn’t what we bought.” That transition is very different because you see this investor who typically has a majority stake trying to nudge the founder out gracefully and with empathy. And that’s a very different transition.

For founders, it’s the recognition of just because you are not in charge doesn’t mean your original vision and the impact you want to have on the world can’t come to life. In fact, it might be able to come to life better if you focus not on who’s in charge, but what can get done.

For founders, it's the recognition of just because you are not in charge doesn't mean your original vision and the impact you want to have on the world can't come to life.

Eric: Talk to me a little bit about some of the mistakes that sponsors and founders might make in either selecting a CEO or the actual transition themselves.

Matt:

I don’t think people do a thorough enough job of recognizing the future back value creation strategy. Very often they think present forward, getting the business from $100 million in ARR to $400 million. But they don’t consider that step change with new aspects like going international or needing new sales channels. When you think about that future back and you write out a $400 million ARR business and what that work chart looks like. Then with that awareness, you can look at a potential CEO candidate and say, “Can this person and the team we put around them actually be that team sitting around the table at the end of this next chapter?”

Let’s assume the selection goes well.

Potentially 75% to 100% of the direct reports of the second CEO in the first 18 months will change.

Not because the people that were there were the wrong people, but because we are going in a new direction that’s going to be different than the one we just went on. That needs to be kept front of mind as well.

Eric: What aspects of the mission and the culture are important to keep, and what isn’t – So employees you want to keep stay on the journey?

Matt:

The company’s purpose, strategy and values change. They go through an iteration for this next run for the second CEO. It’s taking the best of what got us there and then taking a new view relative to the future. A founder-led business operates with an ethos that the founder is all knowing and powerful. So, you oftentimes don’t get decentralized decision making or autonomy. You see a lot of people seeking approval and trying to be in good favor with the founder. You need the businesses to run not in a sterile environment, but very outcome-driven because you have shareholders and employees that are expecting a return for their time or money. And that’s a big change culturally.

Eric: This decentralization of decision-making is critical to scale a business.

And one thing I often find as the second CEO is that you need to spend a lot of time communicating with key people that you want to take with you to the next level. Well, fantastic, Matt. When I think about the importance of founder transitions to private equity, particularly growth equity firms, I know it is such a hot topic. What a great thought to get this in the market and expertise at an important time.

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Bespoke Partners Named in Top 10 of the “Top 49 Retained Executive Search” 2-Years Running by C-Suite CV Secure.

About ETJ Advisory

ETJ Advisory enables highly driven executives to achieve uncommon goals that alters their personal trajectory. Matt works with a select group of CEOs who are founders or second CEOs by not only enabling them to thrive but significantly accelerating the scale of their leadership team.

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Author:
Eric Walczykowski
Chief Executive Officer

Eric is passionate about building high-performing teams that value doing their best, working together, overcoming adversity and learning.

As a proven growth executive, Eric has served as CEO, President, Board Member, Investor and Advisor for technology companies that achieved over $4.5B in successful exits.

Eric brings to Bespoke Partners significant professional services experience from Deloitte and Andersen, as well as the high-growth client executive perspective for private equity-backed technology companies.

Eric earned an MBA from the Kellogg School of Management at Northwestern University and a BS in Business from Fresno State University.

Outside of work, Eric enjoys spending time with family, coaching baseball, travel, attending live events and sipping good wine.

Featuring:
Matt Sharrers
Managing Partner
ETJ Advisory

About Matt

Matt is the Managing Partner of ETJ Advisory, and author of the newly released book, “The Second CEO: Accelerating Scale When Following the Founder,” released June 11th. Ordering is available here: https://a.co/d/8vjnfU8

Drawing from firsthand experience and mentoring, Matt provides actionable advice and key insights to help aspiring and incoming second CEOs drive growth and successfully transition into their roles.

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