This article first appeared on Hunt Scanlon Media
May 18, 2023 – Like in many other regions, the private equity sector in Canada is expressing a mixed forecast for the rest of this year. While some firms are experiencing healthy fund raising and deal activity, others are curtailing targets and managing LP liquidity concerns, given the 20-year low in equity financings to date in 2023, according to Bill Vlaad, CEO and managing partner of Toronto-based Vlaad and Company, a executive financial recruitment firm. “Many PE firms operating in Canada have diversified their offerings in recent years to include investment opportunities beyond our domestic border, investing into geographies and sectors appealing to a larger LP pool. Additionally, the relative size of the average Canadian PE fund keeps it out of direct competition from many global players and in writing smaller cheques allows for a nimbler GP then many larger shops.”
Vlaad and Company’s activity in direct investment/PE recruiting has evolved over the years. The firm started with a focus on investment bankers which evolved to include investment professionals within private equity firms. “Our success in hiring internally for our PE clients led us to partnerships for C-suite professionals within their portfolio companies,” said Mr. Vlaad. “Our understanding of the GPs investment style, philosophy and culture meant we held valuable institutional knowledge usable to find C-Suite hires whom would work well with the PE firm’s operating style.”
When looking to invest Mr. Vlaad explains that if there is a good business case, PE firms are interested. “The recruitment industry ticks a lot of boxes for private equity firms,” he said. “The highly fragmented industry boasts high margins, a diverse and dedicated client base, with a scalable product offering. In theory, the appetite should be there for private equity investment.”
Mr. Vlaad also notes that what recruitment firm owners need to answer for a possible PE investor is: “How do you manage the introduction of new technologies, how repeatable is past success, and how can financial or operational leverage be applied to increase cash flow from the business.” Unfortunately, he says that many firms miss out on PE opportunities because they fail to see value from the prospective of the buyer.
Like many in recruiting, over the last few years Vlaad and Company has benefited from the dramatic upswing in the financial markets coupled with pandemic-created human resource supply issues. “While the forecasted recruitment numbers are softening for the remainder of the year, this is coming off two extremely good and arguably unsustainable years,” Mr. Vlaad said. “We believe recruitment for the remainder of 2023 and into 2024 will reflect reasonable growth rates conducive of a well-supported market with active managers constantly screening their teams to ensure top-level performance.”
Candidate’s Market
In theory, it’s always a candidate market and at the end of the day, if a candidate doesn’t find an opportunity appealing, we are left without a solution, according to Mr. Vlaad. However, he explains that there are signs that the pendulum has swung materially towards the client in recent months. “What has evolved post-pandemic is a new professional work ideology with conditions and expectations not yet incorporated into the operational structure at many firms,” Mr. Vlaad said. “Until the bid-ask spread between the candidate and client demands/needs narrows, our belief is we will continue to see candidate-centric recruitment pressures in many sectors, especially those reflecting needs in newer, less-institutionalized roles and titles such as ESG or where systemic hurdles remain, such as increasing the diversity of teams. The value of a good hire and the cost of a bad one can materially impact an investment thesis and recruitment partners continue to demonstrate the positive return their service delivers to PE firms.”
Bill Vlaad is a former investment banker and has served time in corporate development and as an entrepreneur. He founded Vlaad and Company in 2007. Previously, Mr. Vlaad was senior director for George Weston Ltd. He has also been an associate at both BMO Capital Markets and Crosbie & Company.
Mr. Vlaad shared with Hunt Scanlon a recent example of a search his firm just handled and how the process unfolded. “Recently, we were responsible for hiring a head of corporate development for a mid-market PE firm’s highly acquisitive portfolio company,” he said. “When looking for the right fit for the role, the hiring managers at the GP looked to us to ensure candidates would represent their values. Having previously worked with the owners on several critical searches, in addition to screening for technical excellence, we could offer our clients comfort that culture continuity would exist with any candidates we presented.”
Vlaad and Company is a financial-sector specialized recruitment firm providing full-service recruitment needs across Canada. The firm’s clients includes major Canadian, foreign and independent investment banks, pension funds, hedge funds and corporate development teams within major Canadian organizations.
Contributed by Scott A. Scanlon, Editor-in-Chief; Dale M. Zupsansky, Managing Editor; and Stephen Sawicki, Managing Editor – Hunt Scanlon Media
