July 16, 2015 – Caldwell Partners announced a significant expansion of its business into Latin America yesterday by forming a strategic alliance with CPGROUP LATAM Ltd., a company founded by the partners that established and led the Latin American operations of CTPartners. Through the alliance, Caldwell extends its global reach significantly beyond Canada, adding 16 partners in seven offices across Latin America and Florida: Bogota; Caracas; Lima; Mexico City; São Paulo; Santiago de Chile; and Miami.
Under the affiliation agreement, CPGROUP LATAM will operate exclusively under the Caldwell Partners brand and will have access to Caldwell Partners’ training and intellectual property. “We are truly excited to be joining forces with these impressive search teams,” said John N. Wallace , chief executive officer. “This is a huge step
forward for our firm, as we continue to solidify our ability to conduct international and cross-border searches for our clients.”
With the addition of the following partners and their teams through the new Latin American alliance, Caldwell Partners will claim 53 partners in 20 locations worldwide. The 16 new recruiting specialist additions include six managing partners: Eduardo Antunovic, Karin Brandes, Jorge Caridad, Magui Castro, Nestor D’Angelo, and Eduardo Taylor; and 10 partners: Muriel Belda, Natalia Borda, Victoria Hyde, Lucy Krell, Alan MacDonald, Maria Mejia, Ana Cláudia Reis, Cali Santa Maria, Maria Alejandra Trujillo, and Arthur Vasconcellos.
Mr. Wallace called the alliance agreement “a pivotal moment” for Caldwell, saying, “we are carving out a space for our firm as the premier alternative to the big firms. We have the breadth and depth to serve our clients on a global basis across the major industries, yet we are nimble enough to move more freely through the market and provide more direct accountability to our clients.” One big difference, said Hunt Scanlon Media founding chairman and CEO, Scott A. Scanlon, is that all of Caldwell’s chief rivals – among them Korn Ferry, Spencer Stuart, Russell Reynolds Associates, Heidrick & Struggles, Egon Zehnder, and DHR International (which is currently undergoing acquisition negotiations with Caldwell), are all wholly owned.
“Franchise set-ups have been met with limited success in the recruiting industry,” said Mr. Scanlon. “There have been issues of quality control, client off-limits accounts, consultant fee splits and branding.”
Key terms of the alliance agreement include an initial term of five years and provides for CPGROUP LATAM to pay Caldwell Partners 2.25 percent of Latin American revenue for the first two years of the agreement and 4.25 percent in subsequent years. In exchange for those royalty payments, CPGROUP LATAM will have rights to use the Caldwell Partners brand, search process and methodology and related intellectual property. Importantly, should there be a change of control of Caldwell Partners during the next two years, CPGROUP LATAM will have the right to terminate the alliance agreement and will be entitled to a dislocation and rebranding fee of $2 million.
“It seems a bit of a poison pill strategy that’s been put in place in light of recent acquisition overtures from DHR,” said Mr. Scanlon. “It’s simply a cost DHR will have to swallow should their takeover bid for Caldwell come full circle.” According to Hunt Scanlon, DHR continues to accumulate shares in Caldwell. Yesterday, the firm purchased 52,000 more shares in its Canadian competitor, according to a DHR spokesperson, bringing DHR’s stake up to just under 1.2 million shares, or nearly six percent.
Contributed by Christopher W. Hunt, Executive Editor / Publisher, Hunt Scanlon Media