Two Search Firms Finalize Their Acquisitions

December 2, 2015 – Korn Ferry yesterday formally completed its acquisition of Hay Group. Under terms of the acquisition agreement, Korn Ferry acquired Hay Group for $452 million, consisting of approximately $252 million in cash, net of estimated acquired cash and after giving effect to estimated purchase price adjustments as described in the Purchase Agreement, and $200 million in the company’s common stock.

Hay Group, founded 72 years ago, is a global leader in people strategy and organizational performance. It has a portfolio of intellectual property, including several of the world’s most comprehensive management databases.

With this deal now closed, Korn Ferry will serve clients through three business lines – Executive Search, Hay Group (which now includes Korn Ferry’s former Leadership and Talent Consulting segment) and Futurestep. Stephen Kaye, CEO of Hay Group, will continue to serve in this capacity with Korn Ferry.

On a current annual run-rate basis, Hay Group is generating approximately $500 million of revenue and EBITDA, adjusted for historical expenses that will not continue in the combined segment, of almost $40 million.

“We need a new conversation on people,” said Gary D. Burnison, Korn Ferry CEO. “Never before has there been so much pressure on organizations to succeed. Yet by not applying the same rigor to their people strategy as they do in other areas of their business, organizations largely ignore their greatest lever for success.”.

The combination of Korn Ferry and Hay Group brings together nearly 7,000 professionals dedicated to global talent management, said Scott A. Scanlon, CEO of Greenwich-based Hunt Scanlon Media. “This acquisition makes Korn Ferry the undisputed king in what our analysts now see as the dawn of a new segment in the burgeoning field of talent acquisition management.”

Mr. Scanlon said he expects other deals will follow soon among Korn Ferry’s historical rivals. “Gary Burnison just made survival in the headhunting industry that much more difficult,” said Mr. Scanlon.

“The Korn Ferry-Hay Group combination marks a historic moment that will reshape the future of work,” said Mr. Kaye. “This is the perfect combination of two great firms that will be uniquely positioned to help clients achieve their strategic goals and highest aspirations. With more than a century of combined experience, and some of the most prolific people, data and insights in the world, we now have an incomparable capacity to deliver superior results for our clients – ensuring they have the right people, fully aligned, developed and engaged.”

Another deal that closed yesterday was the Options Group acquisition of Whitney Correlate’s business, a capital markets search firm with offices in Hong Kong and Singapore. Financial terms of the deal were not disclosed.

Founded in 2009, Whitney Correlate is a specialist boutique that works with a select number of financial institutions, funds and MNC’s. The firm is also a partner with New York-based Whitney Partners.

The merger will provide Whitney Correlate with access to a larger global client base, while Options Group will strengthen its global investment banking and capital markets recruiting practices. Whitney Correlate co-founders, Russell Kopp and Niall MacDonald, along with four other employees have joined Options Group’s existing Asia team.

“We are very pleased to announce the completion of this transaction.  As the year comes to a close, we look forward to starting 2016 with our enhanced Asia team,” said Mike Karp, co-founder and CEO. Options Group is headquartered in New York, with offices in London, Hong Kong, Tokyo, Sao Paulo, Bogota, Frankfurt, Mumbai, Singapore, Sydney, and Zurich.

In recent weeks, the executive search industry has seen a flurry of acquisitions. AMN Healthcare Services, a provider of healthcare workforce solutions and staffing services, entered a definitive agreement to acquire healthcare-focused executive search firm B.E. Smith for $160 million in cash. This follows AMN Healthcare Services’ acquisition of MillicanSolutions, a physician and executive leadership search firm focused on serving academic medical centers and children’s hospitals nationwide. That acquisition included cash payments totaling $4 million.

Dubai-headquartered executive search and management advisory firm, Metin Mitchell & Company, acquired Russian search firm Chuvaev Consulting. Financial terms of the deal were not disclosed.

Contributed by Dale M. Zupsansky, Managing Editor, Hunt Scanlon Media

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