John Borrowman, CPC
Borrowman Baker LLC
As recently as a year ago it seemed as though the demand for experienced BV professionals would never end. Since then, most practices have brought hiring to a halt and others have actually shed personnel.
What happened to all those jobs? More importantly, will they come back?
To understand where they went, it helps to understand where they all came from in the first place. Imagine the organizational pyramid of a BV practice with a horizontal line drawn through it about one-third of the way up from the bottom. You probably already recognize that if you’re hiring for a position below that line, you can usually hire someone from outside business valuation who brings related analytical experience or training. If you’re hiring for a position above that line, however, you pretty much have to hire from within the profession. And that’s already a pretty small universe.
Responding to the demand for valuation services, practice leaders adopted an opportunistic, or “build-it-and-they-will-come”, approach to hiring. They concluded that if only they could maintain production capacity by adding experienced talent, they could always go out and sell more business. For the longest time, they were right.
For a variety of reasons (and that’s a whole different article), demand for valuation services has fallen. Costs had to be cut. In the world of consulting services, payroll is the only real cost there is to cut. At higher levels in the hierarchy, cuts are driven almost solely by cost considerations. At lower levels, they may combine both cost and productivity considerations.
Some hiring does continue, primarily at either end of the compensation spectrum. At the lower end, employers can hire without significantly impacting overall costs of operations. At the higher end, employers are hiring revenue producers who are likely paying for themselves, anyway. Some hiring does continue at the manager level though it is driven by actual need rather than an opportunistic view.
Demand will return for experienced professionals. Sooner or later, the head of a practice will tire of spreading financials and doing research at 2:00AM, and decide it’s time to add staff. Merger and acquisition activity, a key driver of valuation demand, will come back. At that point, any “slack” in the talent supply will be a function of whether out-of-work professionals have permanently migrated to related careers. When hiring does pick up, the supply-demand pendulum could swing just as quickly in favor of the employee.
The essential fact – that the only place to go for experienced professionals is the industry, itself – will not change.