Ep 4 – Recruitment M&As in Japan, making multiple exits and the pivot to HR Tech – with Nick Johnston

Watch the Full Episode (43 mins)


Recruitment Transactions International is the first global matching platform for buyers, investors and sellers in the recruitment and staffing industry.  In our fourth podcast, RTI Managing Partner Simon Childs speaks with Nick Johnston on his remarkable journey of starting, building and selling a recruitment business in Japan, his pivot to recruitment and HR tech investing, and making a string of successful multiple exits along the way.

In 1999, Nick Johnston founded a recruitment company called Wall Street Associates Japan in Tokyo, one of the toughest and most challenging markets in Asia. He successfully grew and sold the business to en-japan, the premium Japanese online recruitment company in 2010, and rebranded to enworld.

When Nick stepped down as CEO of enworld in 2012, they had over 180 staff, with offices in Tokyo, Yokohama, Nagoya, Osaka, Singapore, Hong Kong, Seoul and Sydney. Their net fee income was US$28,000,000 and profit margin of over 25%.

Nick invests in like-minded, ambitious people to help them grow their businesses, with a particular interest in HR Tech.  He is the author of “Winning over the Japanese Consumer”, a guide on how to build a successful business in Japan.Key Talking Points:

[00:16] Introduction

[01:00] Summary of Journey

– Joined Wall Street Associates (WSA) in Hong Kong and Japan

– Growth and Profitability

– Sale to EN World Japan

– Investments in recruitment tech

[02:08] First contact with Simon

– Part of a group of founders / leaders who sold recruitment businesses in Japan

– Today: collectively US$150 to US$200 million in net fee income post-acquisition

[04:30] What did your business look like pre-Lehman shock in terms of size, business lines, revenue, profitability, and shareholder structure etc?

– Two bad years out of twelve

– Good decisions, bad decisions and classic mistakes

– Going into Lehman Shock: High net income, low margins

– Cost controls to weather the crisis

– Coming out stronger

[09:20] Contact with EN World

– Structures and systems to make you more attractive to a potential buyer

– What interested you about En`s approach? 

– What was the getting-to-know each other or courting process like?  Did you have any other suitors?

– Due Diligence Process

[18:37] Deal structure and the aspirations of the deal  

– Differences between Japanese and western buyers

– Flexibility, earn-outs, “accelerators”, “Act of God”

– Negotiation process and the value of engaging somebody who understands recruitment M&A deals

– How did the PMI go?  What could have been done differently?

– What value did EN ultimately get from the relationship from WSA and what value did your business get from this partnership?  What does that business look like today?

– How long did you stay post deal?  – why did you leave at that point?

[23:49] Expansion into HK and Singapore

[25:58] Investments in recruitment stocks

– What do you look for when you back someone to start a recruitment business?

– “Top Grading” methodology of assessments (values, achievements, etc.)

– Hits and misses

[33:39] Investments in HR Tech

– First investments

– What are the key things you look for in a HR Tech investment?

– Highlights of exciting investments, successful exits, hits and misses

[42:10] Wrap Up

Watch the Highlights (1 min)