With the benefit of hindsight, buying a financial services recruitment business in April 2007 – just before the onset of a once-in-a-generation global financial crisis – should have been a recipe for unmitigated disaster. Recruiters always do badly in downturns, and this particular downturn hit the financial services industry harder than most.
This is an area that Baird knows well: it has completed 13 deals in the human capital sector, including UK niche recruiters Elan, Capital Consulting, SII and Nigel Wright. Its associated analyst arm (Baird is part of the US-headquartered Baird financial services group) is also very well regarded in this area: it was ranked as the top research firm by Greenwich Associates among small- and mid-cap fund managers.
That said, Baird ‘s initial investment thesis was – at least to some extent – overtaken rapidly by events.
As far as the executive team was concerned, however, the most important change was the appointment of a new CFO (the incumbent FD’s role was changed so he could focus on operations and compliance – an area on which he was spending an increasing amount of time as the company grew.) An interim CFO was brought in initially, and then Baird appointed Stephen Segel on a permanent basis in late 2008. This was a crucial step in improving the firm’s financial and operational controls and reporting, which until that point had developed in a fairly unsophisticated way (i.e. largely based on Microsoft Excel).
An obvious corollary of these changes was that it made Aston Carter a more attractive proposition to potential buyers – because they’d have much more confidence in the company’s financial numbers and controls.
Baird clearly played a very active role in Aston Carter from day one. To some extent it was forced to, given the circumstances. But according to Hall, this is standard procedure. “We’re not the kind of firm that writes cheques and then sits back for five years. We’re operationally focused – and we have a global infrastructure. That’s very different to other UK mid-market houses.”
It’s true that Baird sold Aston Carter at a good time. In late 2010/ early 2011, the worst seemed to be over and markets were starting to regain confidence (the business actually managed to beat its target for the financial year 2010-11, and fared pretty well in the subsequent year) – only for conditions to deteriorate again in the second half of 2011.