- October 4, 2024
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John West tried the “semi-retirement” thing. But after holding executive positions at several companies with more than 1,000 employees, he found it hard to slow down.
So instead of taking an early tour of the Golden Years, 55-year-old West launched a private equity firm Dec. 31, with longtime business partner and friend Mark Whittington. According to West, the pair hasn't decided how big they want to grow their new entity, Hire Partners LLC. Says West: “We hope to be at $1 billion in revenues, but right now we're taking steps to being a $100 million company.”
West says the last bit with a chuckle, but the pair is serious about building a rapidly growing holding company for firms in the resource personnel outsourcing and staffing industry. The new firm already wholly owns Atlanta-based Hire Velocity LLC and owns a majority of Washington, D.C.-based TSC LLC.
Looking at West and Whittington's biographies, the impetus for the firm is clear. Both have decades of experience as investors or executives in the RPO and human capital industry. And the pair's histories interweave at System One, a company West founded in 1987 and where Whittington served as CFO and COO.
Despite an economy struggling to recover from the recession, West asserts there is potential in the staffing industry, especially in the IT sector, in the near future.
Breaking down the unemployment rate by sector illustrates his point. According to the most recent data from the Bureau of Labor Statistics, nationwide the unemployment rate was 8.5% for December. But for management, professional and related occupations, on which West says the firms he will target are focused, it was only 4.2%.
So this sector will hit full employment sooner than the economy as a whole, meaning Hire Partners will have a healthy crop of staffing firms from which to choose.
And Whittington sees another trend in the recovering economy. “Companies who stocked up on permanent people 10 years ago aren't willing to do the same today,” he explains. After the two recessions over the last decade, he expects firms to rely heavily on temporary staffing firms. “(Outsourcing temporary staffing firms) will become a permanent part of their business,” he says.
Hire Partners has a unique plan for its investment strategy. West and Whittington will screen potential firms with revenues between $5 million and $30 million, some of which they have known for months or years, and they will buy a majority stake in the chosen company.
The end scenario is not a complete acquisition, says West. The plan is to serve as mentors in helping the firm grow, keeping ownership at roughly 60%. The firms won't be startups, but Hire Partners will serve as something of a “super incubator.” Although if the minority owner wants to sell, the pair will be happy to acquire, West says.
The tricky part will be how the investment targets are chosen. Whittington says profitability is crucial, but he can't give a specific metric he uses — it's more of a know-it-when-you-see-it quality. Hire Partners claims to seek a company that has management with a strong entrepreneurial spirit. Not something that's so easy to discern. West says sometimes he can see it right away and sometimes it takes months.
The success of the company hinges on its ability to make the right investments, which West says the firm is well equipped to do. The founders' experience is a good indicator. But so is the amount of capital the two partners are willing to personally provide, which West says is well into eight figures.
“Mark and I have both been part of companies going from zero to $500 million (in revenues),” West asserts. “We've seen this movie before.”