The hot 2016 market for acquisitions continued this week with the announcement of Randstad’s acquisition of Monster. While not “Microsoft-LinkedIn big,” the acquisition was still noteworthy because of what it says about the direction of HR technology and the talent acquisition category.
According to Fortune, the sales price was around $429 million, with a per-share price of $3.40, a fraction of Monster’s dot-com boom value. The Starr Conspiracy sees three hard truths for our industry to keep in mind about today’s environment:
- Job boards are evolving, not dying. It would be simple, obvious, and wrong to look at this as further evidence that job boards are dead. They aren’t dead, but they must evolve from their traditional business. Monster didn’t do that and it was in a crash dive. For FY 2015, Monster had revenues of $666 million — a decrease from $725 million the previous year. Monster's ability to match its expenses with the new market reality of job board activity was improving, but there was no long-term plan that didn't involve getting acquired by someone who could absorb short-term losses and hopefully turn the business around in a way that maximized revenues while dropping expenses. Expect other evolutions in the space and don’t be surprised if others position themselves for the future better than Monster did.
- HR services firms must embrace technology. Randstad has slowly been moving beyond staffing, where the bulk of its business still comes from. Its RPO and sourcing solutions have been fairly well regarded, and Randstad has suggested that it’s interested in technology. Monster has a portfolio that Randstad can put to better use than Monster did, if it so chooses. We believe that embracing technology isn’t just a specific need for the staffing industry. You see the same dynamic in the benefits space with brokers. The line between services and technology is blurring. Expect that to continue.
- Timing is everything when it comes to acquisitions. After all of the speculation as to who would (or could) buy Monster, this gamble by Randstad seems pretty pragmatic and well timed if it wants to expand its tech business. If Randstad had waited until Monster became a fire sale contender, it would've been acquiring a dead brand with debt baggage. If Randstad had jumped on it earlier, the price would've been obscene for the potential upside. In any M&A environment — but especially today — success requires a little luck and little skill. Monster had more of the former than the latter.
Quick hat tip: To John Sumser in his excellent analysis of the transaction in HRExaminer for this gem: “The pathetic sales price of $429 million is evidence of the Monster management team’s complete incompetence. It doesn’t mean that job board valuations are tanking, just that those guys knew how to wreck a hotel room.” Well played, sir.