Corporate Executive Board to Buy Assessment Vendor SHL for $660 Million
The proposed deal, expected to close in August, boosts the management consulting firm's position as a 'big data' provider in a nearly $4 billion global talent management industry.
Management research and consulting firm the Corporate Executive Board stepped into the human resources "big data" ring July 2, announcing it will buy privately held U.K.-based workforce assessment market leader SHL in a cash deal worth $660 million.
The acquisition, which Corporate Executive Board managers expect to close next month, is the latest indicator of how hot the field of data analytics is right now, in and outside of HR.
Being able to meld SHL’s assessment data, which is basically content, with the best practices and thought leadership that the Corporate Executive Board derives from its member clients makes the combined entity “very valuable,” says Jason Averbook, CEO of Knowledge Infusion, a talent management consulting firm. “Everyone wants to know what their peers are doing,” Averbook says. By acquiring SHL, the Corporate Executive Board can provide specific templates for what retailers or manufacturers are doing. “That’s a huge asset,” he says.
By offering cloud-based computing services, vendors as diverse as IBM Corp. and LinkedIn have gained the ability to aggregate unprecedented amounts of information from hundreds if not thousands of customers. They're mining that data and selling the results to customers who are using it to pinpoint trends, identify business opportunities, and in the case of HR, understand how to hire and manage employees more effectively.
"Virtually everyone in the software platform business is going to try to sell data," says Josh Bersin, president and CEO of Bersin & Associates, an Oakland, California, HR research and advisory firm.
SHL's fast-growing, high-margin assessment business makes it an HR data goldmine. In fiscal 2011, the company earned $7.8 million on revenue of $209.8 million overseeing more than 25 million assessments in 30 languages for more than 10,000 clients.
SHL is no stranger to mergers. Backed by private equity firms HgCapital and Veronis Suhler Stevenson, SHL built its current business out of a series of mergers and acquisitions. The biggest of those came in 2011 when it merged with pre-hiring assessment provider PreVisor, becoming the industry's top assessment firm, with such clients as Barclays, Coca-Cola Co., Microsoft Corp. and Time Warner Cable Inc.
The Corporate Executive Board's business is larger but more well-established and growing slower, one reason it was interested in buying a smaller, faster growing business, Bersin says. In fiscal 2011, the Arlington, Virginia-based company earned $52.6 million on revenue of $484.6 million.
The acquisition helps bolster the Corporate Executive Board's position in a nearly $4 billion global talent assessment, acquisition and management business that's gaining 7 to 10 percent a year, Tom Monahan, the company's chairman and CEO, said in a July 2 conference call on the deal.
The Corporate Executive Board will pay for the acquisition with $625 million in new loans and $35 million cash on hand.
Michelle V. Rafter is a Workforce Management contributing editor. Comment below or email email@example.com.