June 23, 2015 – June 23, 2015 — A Chicago-based executive search firm has struck a deal to acquire 17 offices and 250 employees from a New York rival that has bled talent and market value for months in the wake of a federal investigation and a hostile takeover attempt.
DHR International will buy “selected assets” of CTPartners Executive Search from the firm’s lenders, according to a statement. The purchase comes four months after DHR set its sights on the firm.
CTPartners lists on its website 44 offices, including one in Chicago, and it had more than 600 employees in March. DHR booked $170 million in 2014 revenue in the United States, where it does the bulk of its business; CTPartners brought in $177 million worldwide.
Terms of the deal were not disclosed.
CTPartners’ stock price has dropped 80 percent, closing out last week at $1.39 a share, since DHR offered in February to pay $7 a share.
The free fall began when complaints surfaced in December of sexual discrimination at the firm, including female search consultants being taken off lucrative accounts and then-CEO Brian Sullivan stripping at a company event. Sullivan resigned in March. The Equal Employment Opportunity Commission is investigating.
‘A LOT OF THIS WAS TIMING’
“This is a win for DHR,” said Scott Scanlon, CEO of Greenwich, Conn.-based Hunt Scanlon Media, which covers the recruiting industry. “A lot of this was timing and being patient and waiting for the right opportunity to move in.”
Major search firms have been picking off CTPartners’ top-billing headhunters for months, Scanlon said. In Chicago it lost Vice Chairman Mike Matella to Heidrick & Struggles International, where he now co-leads the global services practice, and Vice Chairman Robert Voth to Russell Reynolds Associates, where he is a managing director in the financial services practice.
Despite those high-profile hires, DHR still is getting a core of search professionals with the potential to add $75 million in revenue, Scanlon said. More important, it is getting the overseas offices it needs to expand its global footprint and so compete with search industry giants like Los Angeles-based Korn Ferry and Chicago’s Heidrick & Struggles and Spencer Stuart.
In a statement yesterday, CTPartners said it would need additional funding (which it does not expect to receive) to operate past June 30, and proceeds from the sale to DHR are unlikely to satisfy its obligations to the creditors. “Consequently, the company intends to wind down its remaining operations in an orderly manner, but it may be required to cease operations entirely or seek bankruptcy protection.”
A spokeswoman for CTPartners referred questions to DHR.
Crain’s Chicago Business, by Claire Bushey