Steven Raize is a corporate solicitor who saw a gap in the market and focused on it with precision and tenacity. A partner at Gateley Plc since January 2015, his story shows that untapped niches are waiting to be discovered, but exploiting them requires learning, patience and commitment. Steven’s story also proves that becoming a sector specialist is one of the most effective routes to business development success. Here’s how he did it…
How did you come to specialise in the recruitment sector?
In 2007 I bumped into an ex-colleague from Clifford Chance who had become investment director for Hamilton Bradshaw, a private equity firm. He told me his firm was about to initiate its first investment and invited me to pitch. After pitching, I was instructed to buy Eden Brown, a recruitment business. The purchasing of other recruitment firms followed.
I stood back and thought: “There aren’t many mergers and acquisitions [M&A] lawyers who specialise in the recruitment sector. This is an opportunity.”
Why did that niche exist?
Recruitment wasn’t perceived as an attractive sector back then. By and large, it was an area for litigators and employment lawyers. And today a lot of my competitors are from those sectors. However, those competitors have one big weakness: they build up a client relationship and at the most important point – when the owners of the recruitment firm wishes to sell – they can’t help anymore.
There’s no point giving advice that’s not commercial or cost effective. A corporate lawyer is best placed to understand that commerciality.
They have to introduce the client to a new corporate lawyer. So just when the client needs its trusted advisor the most, they’re not there.
My view was that it should be the corporate lawyer who builds the relationship and becomes the trusted advisor, and call upon other experts when necessary.
So the corporate lawyer is there to prepare the company for sale right from the beginning. And I’m yet to meet a recruiter who isn’t looking to exit at some point.
Do recruitment firms think it’s strange to have an M&A lawyer as a first point of contact?
No. Because most want to exit, they get it. They understand that creating value, increasing value and protecting value is the work of an M&A lawyer. They want someone who will be with them for the whole journey.
What we have done is set up a cross-departmental group that focuses on advising staffing businesses. In addition to corporate lawyers, we’ve got employment lawyers who can advise on things like The Agency Workers Regulations, restrictive covenants and social media; commercial lawyers who understand the types of contracts that staffing businesses enter into; plus tax and pension lawyers.
So now we focus on providing a full legal service to recruitment businesses, but we put preparing for a sale and maximising value at the heart of it all.
So you sell across the entire service line?
Absolutely. Corporate lawyers are jacks-of-all-trades. We’re good at identifying potential pitfalls and always know a lawyer who can fix it. We are also good at making sure the advice our clients are given works in the real world. There’s no point giving advice that’s not commercial or cost effective. A corporate lawyer is best placed to understand that commerciality.
How is your reputation in the recruitment sector helping with business development?
As a corporate lawyer, what used to happen is I would get a call from a corporate finance adviser who’d say: “We’ve got a client who’s about to sign heads of terms. You’re meeting them on Friday, you’re pitching against three other law firms and they’ll go with one of you.”
Now, because we’ve got a good reputation in the Human Capital sector, clients are coming to us directly two or three years before they want to exit.
Now, because we’ve got a good reputation in the Human Capital sector, clients are coming to us directly two or three years before they want to exit
And the roles have changed because we now refer those clients to corporate finance advisers, accountants, wealth managers and so on. They trust us to refer them to the right people (who also specialise in the recruitment sector).
So by building up your credibility as a sector expert, you enter the relationship at an earlier stage?
Yes, there is no beauty parade because you’re seen as the trusted advisor.
How did you start to reach out to recruitment firms?
In marketing there’s a basic principle: go where your audience is. What I did initially was identify all the recruitment organisations and their owners. As a result I met David Head at Recruitment International (a news and events website for the recruitment sector) and we began co-hosting seminars. He had a fantastic contact book and it exposed us to many people in the sector. We ran events on subjects like preparing a company for sale and maximising value.
We then did the same thing with accountancy firms and corporate finance advisors that focus on the recruitment sector. The idea was to work together to run seminars and round-table discussions where we would introduce clients to each other. Each event would be for 10-15 people and focus on providing relevant content – not just legal but also business advice from people who’d done it before. There was no “hard selling” at any of these events so people felt comfortable attending.
We have also joined organisations like APSCo [The Association of Professional Staffing Companies] to gain more credibility and trust. And in recent years I’ve teamed up with RecruitmentTraining.com – I provide them with a room once a month and they bring 15-20 owners or managers of recruitment businesses for knowledge-sharing sessions. During the first hour-and-a-half, each attendee talks about the issues they are facing. You can’t buy that information – it allows us to really understand their concerns and what they need us as advisors to address.
So you give a lot of time for free?
Yes, I meet up with around two recruitment businesses a week on average. I speak at conferences, write articles and put on events. For a number of years I’ve hosted – alongside other corporate finance advisors – something called the Deal Room. We invite recruitment business owners, private equity funds and trade buyers and provide them with an informal platform where they can potentially discuss M&A and investment opportunities. There’s no hard sell or presentations; we just facilitate and if anything turns up, we hope to pick up the legal work.
Do you ever cold call?
My two biggest clients in the recruitment sector came from cold calling/e-mailing.
That’s impressive considering many lawyers are against the idea of cold calling. Do you have any special techniques?
I ask for 30 minutes of time. I get lots of no’s. But when I get a yes it’s paramount that I demonstrate my detailed knowledge of the sector
When a business stands out and seems to be really going places I will sometimes call them up or e-mail them, explain my credentials, and offer to share my sector insights with them.
I ask for 30 minutes of time. I get lots of no’s. But when I get a yes it’s paramount that I demonstrate my detailed knowledge of the sector and show that I clearly understand what the business wants to achieve. I am then able to ask: “Have you thought about X, Y and Z?”
It’s also important to keep your finger on the sector’s pulse. Doing so often gives me a reason to call. I will say: “I’m calling because of X, which I think might be of interest.” Or “I’ve just read about…”. Or “congratulations on…”
Then I mention that we’ve done a lot of deals in the sector, give examples, and ask for 30 minutes to share insights.
What advice do you have for someone wanting to become a sector specialist?
To become a true master of your sector you must invest a lot of time in meeting people and understanding their issues and concerns.
Only by really getting under the skin of a sector will you find that nugget of opportunity hiding within
Only by really getting under the skin of a sector will you find that nugget of opportunity hiding within. And only by demonstrating enough passion, know-how and skill to the businesses within that sector will you gain a strong enough reputation to succeed.
Also, cold calling is not a crime. If you feel you can genuinely help a business and aren’t afraid to hear the word “no”, it can lead to great things. It has for me.
Steven Raize is a Corporate Partner at Gateley Plc , the first UK commercial law firm to float on the London Stock Exchange.
His contact details are:
Tel: 020 7653 1710