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The Shifting Dynamics of Recruitment and Compensation in Today’s M&A Advisory Market
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June 2018

The Shifting Dynamics of Recruitment and Compensation in Today’s M&A Advisory Market

By: Martin Mendelsohn, Senior Partner

Over the past five years, the US has enjoyed a robust deal market which has directly contributed to increased demand for talent across the Transactions Advisory support and services ecosystem. M&A activity has been cross-sectoral, with particular emphasis on healthcare and health services, finance and technology. These industries have also witnessed rapid growth, with concurrent increased talent needs in the M&A domain, in addition to the ever-changing regulatory and compliance field. Public companies are growing larger – most often via acquisition – while PE firms and privately held enterprises feast on a diet of low-interest rates and positive, global macroeconomic drivers. Transactions have become more complex as data moves to the cloud rendering costly infrastructure obsolete, while advanced analytics enables faster and more transparent decision-making in the C-suite and Boardroom.

Professional services firms have found themselves playing ‘catch-up’ during this period, often scrambling to ensure adequate coverage across service lines, while at the same time preparing for the next wave of transformation and change (likely to come from a spike in Operations Improvement focused work, and widespread adoption of cloud, mobility and emerging payments technologies). Our discussion focuses on compensation trends in today’s Transaction Services consulting environment, and how employers – and candidates – can position themselves for success in this latest iteration of the War for Talent.

If you are a Consultant in the M&A Advisory market who survived the 2008-2009 recession, your career has likely accelerated at a pace beyond ordinary and traditional expectations. Big Four compensation has risen at all levels by no less than an aggregated 30% on base salary alone since 2013, and by significant amounts in more highly-leveraged compensation environments. Directors and Managing Directors/Partners at Big Four and Strategy Consulting firms possessing Transactions ‘majors’ and specific industry, functional or domain oriented ‘minors’ have been in particular demand, with an emphasis on sell-and-deliver consulting practitioners. Employers in many cases are being forced to break out of salary ‘banding’ constrictions, recognizing that in order to engage and attract top talent, employment offers need to be that much more aggressive on compensation, and occasionally on title upgrade as well.

Today’s increasingly mobile workforce and millennial mindset have only augmented employer headaches, as employee loyalty wanes and multiple offers – coming from industry and consulting firms – greet candidates at any one time. The candidate is in the driver’s seat and this has caused a jolt to both candidate expectations and employer behavior. This situation is unique and has not been witnessed since the run-up to the DotCom days and is evidenced by low unemployment numbers in professional services, as well as by the fact that industry and consulting firms are clamoring for the same type of candidate. Our assessment is that the situation will not – indeed cannot — persist and is likely to run its course within the next 18-24 months. The message here is that employees need to position themselves accordingly and temper overly ambitious demands, as the market is shifting.

Companies retain databases of prospective candidates (potential employees) and are increasingly leveraging external recruitment software and services — which means that candidate activity and commitment during an interview process is memorialized by current and future potential suitors. Candidates should bear this in mind during a recruitment process. On the employer side, the proliferation of social media in hiring processes and the advent of surveying candidate recruitment ‘experiences’ often turn potential candidates into uninterested – or undesired – parties, for various reasons. Companies need to entertain more pro-active and personal methods of outreach to prospective candidates, as individuals are less likely to return (or answer) phone calls, or to respond to generic outreach via LinkedIn or email/text. Employers need to be more creative and sophisticated from a human angle in this very tight labor market – though should not over-extend.

The key takeaways for professional services employers today are that (a) cash remains king and will help close top candidates; (b) corporate culture and external perception are becoming more prominent assessment factors for candidates today, and employers should leverage this accordingly; and c) employers need to maintain a steady and consistent cadence and level of interest when courting senior executives.

For more information on this topic, please contact Martin Mendelsohn, Senior Partner at Kingsley Gate Partners, martin@kingsleygate.com.