Episode Transcript
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(00:09):
Welcome to Strategic Growth Council, apodcast about strategic growth and mergers and acquisitions
for the middle market. If youare interested in learning more about organic growth,
growth by acquisition or the sale ofyour company, this show will be
interesting or useful, or maybe bothfor you. Thanks to our sponsors a
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Claro Growth Partners, a strategy consultingfirm serving middle market mergers and acquisitions.
You can visit a Claropartners dot com. Our other sponsor, of course,
is Strategic Growth Council, not thepodcast, but the peer Advisory Council SLASH
Virtual Roundtable, SLASH mastermind group forsenior execs and business owners contemplating what a
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acquisition, a sale, or juststrategue growth. Strategic Growth Council collaborates with
participants in the M and A ecosystemsuch as private equity groups, lenders,
investment banks, and relevant service providers. Visit Strategic Growth Council dot com to
learn more. Now every episode Iinterview and an expert or at least a
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participant in the world of strategy growthor mergers and acquisitions. And today I'm
joined by Debra Young of sheer Velocity, a global retained executive search firm focusing
on the lower middle market with connectionsin private equity. Talent obviously is hard
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to retain and to recruit for today, so very relevant. Deborah, welcome,
thanks for being here. Thank you, Kit, It's great to be
here. To appreciate the the invite. Yeah. Absolutely, I'm looking forward
to this topic and I'm sure ourlisteners will get a lot out of it
because, as I said, it'sa relevant topic. So yeah, maybe
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if you could just take thirty tosixty seconds in terms of a background on
yourself, that would be great.Sure. So I've been doing executive recruiting
for almost twenty years now. I'mactually a music major by trade in college,
but ended up, through the courseof the way life leads us into
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different directions, finally into executive recruiting. And started out opening up a office
for a boutique firm, did thatfor four and fugh years, built that
business here in Denver, and thenget recruited to a top five global firm
at the time. That is whereI met my business partner. We worked
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together for oh close to four years, I think it was before we left
and started our own firm in twothousand and twelve. Sheer velocity, and
we are now listed in hunt Scalon, which is absolutely the largest single source
of information in the human capital space, as one of the top PE recruiting
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power one hundred firms in the country. That's great year, that's great.
Well, congratulations on that. AndI'm going to take a little bit of
a left hand turn and back upto music major in college. Do you
do you play any instruments today?I haven't touched my foot that was my
major. I can play piano.I kind of lived through my son as
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a phenomenal musician and has a band, so oh wow, fantastic. But
now it really formulated large part ofmy life and how I manage my work
is you know, there's a lotof transferable skills. I guess yeah.
I mean what you do is probablyequal parts art and science, and the
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at least the art aspect. Imean, music is art and science,
so it is relevant. Um.So our listener are as I said earlier,
focused on organic growth and acquisitions,divestitures, sales of businesses. And
as you said, you're you're listedas one of the top resources for private
equity groups. How does your worktie into mergers and acquisitions? Sure,
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so we do work in all threeareas organic growth, m and A divestitures
and sale of businesses. So we'reoften brought in if if a PE firm
is looking to but they bought anew company, they're looking to swap out
the founder owner CEO, which usuallyhappens sometimes within of course of either a
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year or two, and then youknow they flip and bring in a CEO
to help grow the company, whichis a very different individual than someone that
we would place in a mergers andacquisitions scenario for example. I mean,
like you know, your CFO isa very specific talent in MNA. You
know they have you know, theyhave to understand deal's potential risks and due
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diligent process and all of those things. So understanding where the company is at
and what kind of driver is goingon, whether it's organic, M and
A divestiture, different skill set oftalent at the leadership level is needed.
And if as a search for we'reable to identify and understand the skill sets
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for all three of those. Yeah, and I just want to add maybe
to point of clarification on the acquisitionfront. I never really thought about this
before, but any sense of howfrequently a private equity group already has a
successor in mind. I mean whendoes the search for a new CEO to
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place. It's as you said,it's quite common for that founder owner,
you know, the family dynasty toto remain in place for some period of
time and then there's a transition thatoccurs. How often is the successor already
sort of planned out in advance,Well, it depends on, you know,
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the company. One of the thingsthat we tell people are that own
businesses, say a family owned business, you need to plan ahead your leadership
talent team UM several years before yousell your company because you need to have
them in place in order to UMyou know, get the best retired on
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the sale of your company. Soyou need to have strong leadership talent.
Lots of times that talent will willthen stay on UM. To be honest
with you, you know, thehuge turnover that's going on in the in
the market right now, I meanit's very volatile and CEOs are you know,
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hopped on the bandway in the boomof you know, trying to find
greener pastors. So as of rightnow, the the fill rate for a
private equity firm for CEOs, youknow, can be up to seventy three
percent over the course of the lifeof the pe firm, So there's a
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lot of turnover going on. Sohaving a stable buying a business that has
a stable leadership team already, Ithink really is to your advantage, and
then maybe year down the road swapout to bring in someone who can take
that organization to the next level.Yeah, endeavor. We talked about this.
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We talked about this the very firsttime you and I spoke. But
it's been a while and I'm sortof curious and maybe that maybe I should
have led with this question. Thisis the great resignation, right, So
there's and as you said this thiscarries over all the way up to the
CEO level. C level executives areactively looking for new opportunities. We've never
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really experienced a period like this beforein human capital. Is this a great
time to be in your position oris it a really really challenging period for
you? Or is it both?It's a little bit above. I will
tell you though. We have suchdeep routes within our firm, in our
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networks of everyone within the firm inall different industries, that we have this
very rich database of contacts. Ifyou don't have that and you just put
up a shingle say I'm going togo recruit. You're gonna have challenge finding
candidates. There's a lot of peopleout there, but there aren't if that
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makes any sense. There's a lotof people who are who are looking to
move, but they're moving for thewrong reasons and they're really not the right
wants to be hiring for a positionor have the red motives for being not
I shouldn't safe for looking but forthat particular role. So it's a very
good market for recruiters right now.We're you know, seeing record numbers in
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the number of searches that are beingexecuted on. But if you don't already
have a deep rich network, you'regoing to struggle finding talent. Yeah,
you talked about this deep rich network, and I wonder is that your primary
differentiator? And if not, whatis how do you differentiate in today's market.
Sure, that's one of the thingsthat differentiate us, for sure.
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But the other thing too is youknow pe firms right now, number one
priority for them is in the wakeof COVID, is there's this transformative shift
that's happening in their emphasis has newdrivers right now, they are on culture,
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diversity, and di and engagement.So so their aim is to find
new sustainable ways to enhance value Iguess growth, results and returns. So
they're falling short though on getting theright talent into the right roles, and
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part of that reason is they're movingtoo slowly. So our firms share velocity
speed with transparency. We look atcandidates from a complete three hundred sixty degree
perspective, utilizing some proprietary tools thatwe have in our tool belt that get
not only a technical skill sets deeperthan the resume and interviewing, but also
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cultural fit culture add because every leaderhas a certain belief system or value system
that they emanate whenever they're in anorganization, and if it's not in alignment
with the current team leadership team,there's going to be that run there.
So then you know there's that culturalpiece, and then there's the leadership personality
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piece. You know, well,how do they perform under stress? What
are their derailers, what are theirbright sides? And so if you look
at our search process and that threehundred and sixty degree view utilizing strong data
driven tool sets, there are toolsI should say, assessments or whatever in
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conjunction with deep dive interviewing, behaviorinterviewing really you know, focusing upfront for
technical fit. I will tell youthat's really where the search process just starts,
is where when you find a technicalskill set. From there, what's
more important are the people skills atthe leadership level. And private equity firms
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are starting to recognize this and realizethat because at the end of the day,
you want engagement out of your people, because when you have engagement and
leaders that lead with emotional intelligence.When you have engagement, that's when the
magic happens in our organization. Absolutely, So you set a lot there.
I'm going to try to summarize forour listeners. I mean, you've got
the toolbox, you've got the skills, you've got, you know, the
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quality of interviewing, the network.You went into some detail describing ways that
you differentiate and I you also mentioneddiversity, equity, and inclusion and kind
of led me to think about thisconversation from the viewpoint or of the listener.
Right, So, if you're runninga business, or if you're on
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the board, or you own abusiness, and you're considering using an executive
recruiter or executive search firm. Youknow, what, what should you be
thinking about? What should you beconsidering when you're evaluating service providers. It's
not just those differentiators that you rattledoff, but I would say, you
know you mentioned d EI. Youknow, is where does that fit into
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the strategic objectives of that particular businessfor example? Um, does it start
with big picture goals? Um?I guess it depends on the higher the
level of the recruit right. Um, that was a bit of a muddled
question, Deborah, I'm sorry,I mean I think I got it.
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I think when when you're looking foran executive search firm, in particularly in
the private equity space, there's acouple of things that you really need to
focus on. One thing I dohave to say in d EI is another
thing. Um, But everybody honesin on you know the deep industry,
you know experience that you have,the the you know, the the industry
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that the organization you know, theirpods and services. You got to look
a little bit deeper because you canhire an executive search firm that is,
you know, all I do isa certain industry, but they don't talk
about the block edge problems that comeswith being so niche because when you can't
recruit from your clients, and wheneveryone in your niche is your client,
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where do you go to find yourtalent? So our firm we've kept pretty
much industry agnostic and so we areable to go into companies that some of
these niche search firms can't touch.So that's number one. Credibility and connections
is very important. We have aninety three percent successful rate, a ninety
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two percent client satisfaction in a ninetypercent repeat clientele base. So we've learned
to develop really strong relationships and ourcapability to grow with organizations, with pe
firms and do work in multiple portfoliocompanies is really important. You have to
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have full transparency in the talent searchprocess, which we do by getting back
to diversity, equity and inclusion.I do want to say this. I
think at the end of the day, you can try to really have a
mandate of having you know, somany diverse people leaders in your organization.
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But if you are doing it justto check off the box, you're doing
it with the wrong motive, andso you want to do it so that
it's the right thing for the organizationand not just to say you have this
percentage of diverse candidates on your team. The thing is is if you put
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a diverse candidate into a role wherethey may not really have a good chance
of succeeding, it's not only disruptiveand expensive to your organization when you have
to replaced them, you will alsoare in a way, quote derailing their
career path because that's not fair tothem either. And that's a really good
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point. And I've experienced this firsthandwith you and your experience and wisdom and
your willingness to push back and say, well, let's think about the big
picture. Very helpful. And youknow something else that you mentioned, you
know, you talked about capabilities andrelationships and credibility and transparency. You also
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mentioned industry agnosticity, if that's aword, and in reality, I mean,
you know, people might hold thatagainst you, being an industry agnostic,
but but the truth of the matteris when your focus is on the
lower middle market, you don't reallyhave a choice because there's so many obscure
niche sub subsegments that it's impossible tosay, you know, this is the
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industry that we focus upon. Tosome extent, you've chosen private equity as
an industry, and by definition thatinvolves a number of different weird, obscure,
niche subsegments of big industries. SoI get it, we get calls.
I'm curious about whether there's a successstory that you could share with our
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group that might be enlightening. Sortof a case example, particularly one that
relates to growth or merger and acquisitionactivity that I think that helps kind of
where the rubber hits the road isan example. Sure, I'm gonna lead
company name out because they're they're youknow, clients. But we have a
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client in Indiana, in a verysmall town, and I think it was
in twenty fifteen, we placed fiveexecutives, including a president of a new
division of a one hundred million dollarsPE backed company, and they were in
a pretty niche space, so thereweren't a lot of competitors to recruit talent
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from. And plus we had torelocate have executives to the small town in
Indiana, So right there, outof the out of the gate, you
know, you've got huge challenges.We put the all five candidates through our
search process, which, like Imentioned, three hundred sixty degree views,
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certain tools that we use in orderto make better fits. Information is power,
doing your due diligence, dotting youreyes, crossing your teeth, taking
your time to make the right higherin our client did so. All five
executives are still there. The companyjust bought a one billion dollar organization to
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add to the company, and theywere blought. Now they were public,
and now they went private again bya very large investing pe firm. That's
great, Well, that is agood thor how long ago was it that
you initially did the search for them? Twenty and fifteen? Oh? I
think, said yeah, good,fifteen or sixteen. But over the course
of you know, a year anda half, we felt, you know,
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five very key roles, and um, I know that the president got
promoted to the Holy Company president,so there was a lot of promotions.
I do have to say that Italked with their HR director two years after
all those searches were done and everybodywas you know, was still there,
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and I asked her, I said, so, what did you what do
you think of the five people thatyou know we ended up you guys ended
up hiring that we help place.And she said, I just want you
to know that I know what they'regoing to do before they do it.
The information that you provided us aboutthese candidates was so thorough and so accurate
about behavior, culture fit um.She says, It's just been a true
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blessing to be able to have hadthat insight and that knowledge in order to
help guide and develop their our careerswithin the organization and their teams. Yeah,
so you know, that was agood story for sure, and it's
only fair, I think an interestingand fun to kind of flip the tables
on you and ask for example ofa situation that did not go well.
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But before we do that, youand I haven't talked about this before,
but I am just curious today ifyou're ahead of HR, and you know
your example was one hundred million dollarrevenue business, but even if we went
all the way down to say afifteen or twenty million dollar revenue business,
my question is, there's so manytools available to HR directors to do executive
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search all by themselves. And myquestion is are you seeing an increase in
competition from essentially your client base tryingto do it themselves or has that time
come and they've learned some lessons andrealized, well, it just didn't work
out the way we'd hope we needto go back to somebody like servility.
Is that a fair question, Deborah, I think it is. I think
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okay, taken to account the lastyou know, two plus years since right
March of twenty twenty, and HRhad to just really step up, and
so I think they have learned toappreciate the value of having a good search
partner and the ability to look outsideof the organization while they're busy trying to
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create a safe place for these peopleto work and all the other nuances and
dynamics that go along with being anHR leader besides recruiting. Take that off
their plate. They are, they'vejust been, and I think the last
two years have made that even moreapparent. And the fact that having a
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third party, unbiased individual or ateam looking and looking out in the marketplace
for you is really critical. Theother thing that really like about a good
HR leader is their bench strength andif they've got people that you know lined
up private ep me, that's alittle bit harder. You're not a big,
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large organization where you have, youknow, several layers to pull from
throughout you know, the course ofa person's career, so a lot of
that work has to go outside andeither's believe it or not, it's a
busy, busy process, and it'sa time consuming process. And it's building
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relationships with people, getting their trust, selling your company, your client's company
in a positive manner so that theyfeel comfortable. And I'm excited about an
opportunity. And I realized we didn'ttalk about this previously, but I'm just
curious and I want to add akind of a follow on to what you
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just said. So hypothetically, aprivate equity group is your client, and
they own a portfolio company and maybethey just lost their CFO at portfolio company
number seven? Is it the privateequity group that is your client? And
do they lead the process? Isit the portfolio company CEO or head of
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HR? Is it both? Isit all over the map? It's all
over. We get hired by theportfolio company, we have a search.
We place a CFO that we gothired by the PE Firm for a Denver,
smaller Denver based company just this lastyear, and now we are doing
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their head of business development in sales, and at that part the PE Firm
is not as involved in as theCFO is that we just placed. So
we work at many levels throughout there. We have a client that you know,
their HR, the PE firm's HRleader, you know, oversee some
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of the searches along with the portfoliocompany. So we've done a lot of
different scenarios. But you know,it really is about how you develop your
relationship with your client, whether itbe the PE firm, whether it be
the portfolio company level it's and youhave to maintain connections and credibility with all
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of the above. I get it. So that makes sense. Now back
to the case example, because thisis fun. I'd love to hear a
story about something that that went awryor a miss and what happened. Sure,
so we use the Hogan assessment.I'm certified in Hogan and Hogan is
the only leadership personality assessment on themarket that's designed for the selection and leadership
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talent. So I've been using Hoganfor twenty years. We use it for
our when we get to the endof the search, when we have our
top three candidates for I really don'tcare how many it is, and it's
the number one predict behavior. Andthen in the workplace, so we had
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a search where it was a veryniche, niche company. There was maybe
you know three people in the nationthat did what these guys wanted to do.
And we were able to engage withthis individual and get them on board,
and then we put and the clientfell in love with them, was
wanted to hire them instantly, butwe still needed to put them through the
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hogan. We put them through thehogan, and I will tell you this
person should never be in a leadershiprole. That's all I'll say. Can
you give us not a literal example, but what would be a reason that
you would assess them that way?They should not be in a leadership role.
They would create a toxic culture throughtheir behaviors, their boldness, their
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their excitability, their skepticism, allthese other traits that are identified in the
hole gand I counseled my client notto hire this individual. As hard as
it was to find them, Ijust at the end of the day,
this was a president position and thisperson really should just be an individual contributor.
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Yeah. Interesting, And not evensix months later I got the call
we'd let him go. You haveto redo the search. Yeah, well
you called it, and yeah,the good news is that that demonstrated their
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trust than you, but also yourknowledge of your craft, and you did
it in a delicate enough way thatpresumably it wasn't in your face. I
told you so. Um, sothat's good. That's a good story,
and so any any other you know, sometimes, and there may not be,
but sometimes our guests have some otherwisdom or insights or lessons learned that
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didn't come out in the natural courseof this conversation. Anything else that you'd
like to share for our listeners.Well, one of the things that's really
critical, especially with this challenge ofgetting candidates is to always have, you
know, at least two people readyto step into the role, because if
one one doesn't pan out. Ihad a candidate who was ready, you
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know, to take assign the offerletter, and I got a call the
night before saying they didn't want tomove because their wife didn't want to leave
their book club. So, youknow, you can only that people so
far. At the end of theday, people are are not widgets,
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and they will do what they wantto do. As much as you try
to predict behavior and outcomes for yourclient, you know, clients that don't
understand that being in the people business, it's not a guaranteed. It's not
guarantee that that ball bearing is goingto last, you know, five hundred
million miles on that car. Youknow, you can't guarantee this person's going
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to stay for you know, fiveyears. You can do your best,
and that's what we're good at.But it's it's interesting when you're dealing with
people and getting back to that originalpoint about having you know a stable of
candidates, because you never know ifsomeone's going to pull at the last minute,
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and you don't want to be startingfrom scratch again. Your client doesn't
want you to be studying from scratchagain. So as hard as it is
right now in this tough candidate market, if clients like someone they need to
move quickly, yes, absolutely goodadvice, not only even quickly, but
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as you said, have backups andI will I will add my key takeaway
from this conversation. I never thoughtabout this before, but it's fascinating.
You know, as I come fromthe world of consulting UM and we always
talk about it. It's a peoplebusiness, but and it's a service business.
And you can be really really goodat what you do UM, but
at the end of the day,your service business is not about a deliverable.
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It's about a person that can makea decision that completely throws a wrench
into the works. And I thoughtthat was really interesting the way you describe
that you can go through the processand use best practices and be very good
at what you've done, and findthe right person and negotiate and then at
the end of the day they canjust sort of change their minds. So
that that shows our listeners, Ithink, or demonstrates the value and you
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know, having a pipeline, havingbackups and trusted relationships on an ongoing basis,
So that makes sense. So sheerVelocity a global retained executive search firm
that serves this world that we livethen the ecosystem of middle market mergers and
acquisitions. Um, how, Debrah, how can our listeners find you?
(30:08):
Um? What what's the website?Sure, it's www dot share Velocity.
That's s H E E R Velocity, V E L O c I ty
dot com. Great. And Ialways ask is there anything we can do
to help you? How? Howcan we or our listeners support share Velocity.
(30:29):
Sure, if you have UM anytalent needs, obviously we've being welcome
to go over that with you.UM, I will tell you one thing
about our firm, is we're notafraid to say, you know what,
we're not the right ones for youto do to fill that position, because
if we don't feel we're going tobe set up for success, it doesn't
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doesn't do anyone any good, yourclients, doesn't do any good, it
doesn't it doesn't do any good forour firm. So um it's I think
it's just really important to be youknow, that honest and that transparent as
a search firm because you can takepeople's companies money and know that you you
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know you're not able to do thework is as good as you could.
So um. So we also Ialso want to mention one other thing to
our global affiliation and Knock Global ExecutiveSearch has been rated a top forty global
executive search for them for three yearsin a row, and we've been the
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sole US partner for them for thelast going on nine years. So we
refer in exchange business in thirty fivecountries around the world. So if any
of your clients need any help openingoffices across the country or have offices that
you know may need some leadership talent, please feel free to reach out.
We can make those connections as wellfor you and was that enoch? Is
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that the acronymic knock? I nA C right, Okay, so that's
good. I actually thought of aclient that I'll introduce you to you shortly.
Thank you, Deborah, So Deborahshare Velocity keep her in mind.
But in addition to Deborah, thankyou very much for your time and your
input. This was a fun conversation. In addition to share Velocity, please
(32:22):
think of our sponsors, a ClarroGrowth Partners, a Strategy Growth Strategy consulting
firms serving the middle market of mergersand acquisitions, and Strategic Growth Counsel dot
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(32:47):
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