With Job Cuts Underway, Korn Ferry to Acquire Third Interim Business

January 19, 2023 – Korn Ferry will cut jobs and eliminate underutilized office space as part of a cost reduction plan. The firm said the job cuts will affect less than five percent of its workforce, which was 10,779 as of April 30, 2022, according to its latest annual report. At the same time, the top-ranked executive recruitment firm is showing no signs of easing off on its acquisition efforts as it enters into a definitive agreement to acquire Salo LLC., a leading provider of finance, accounting, and HR interim talent.

The Los Angeles-headquartered executive recruiter and leadership consultant – the largest globally and in the Americas as ranked by Hunt Scanlon Media – anticipates the plan to cut costs by about $45 million to $55 million a year. Charges resulting from the cuts, including severance, benefit payments, and lease termination costs, are expected to be $45 million to $50 million, the majority of which will be paid during the remainder of the firm’s 2023 fiscal year ending in April.

Korn Ferry’s stock, which was still inactive in premarket trading, has gained 4.5 percent over the past three months but lost 27.7 percent over the past 12 months, while the S&P 500 SPX, -1.11 percent has rallied 11 percent the past three months and declined 16 percent the past year.

Korn Ferry recently released its 2023 second quarter revenue of $727.8 million, an increase of 14 percent from the second quarter of last year. Revenue increased in all lines of business except executive search which was down about seven percent compared to the same period a year ago.

“It’s clear that the global economy has been in transition for several months,” said Gary D. Burnison, CEO of Korn Ferry. “We are seeing change on every front – from over a decade of high liquidity and historically low interest rates to changes in central bank policies, significant shifts in global trade lanes, and persistent inflationary pressures. In response, companies and our clients will undoubtedly have to continue adjusting their organizational and workforce strategies to tomorrow, which is opportunity for Korn Ferry.”

Korn Ferry repurchased 622,500 shares of stock during the second quarter for $33.1 million. In addition, the firm declared a quarterly dividend of $0.15 per share on Dec. 7, 2022 which was payable on Jan. 13, to stockholders of record on Dec. 21, 2022.

Boosting Interim Solutions Via Acquisition

Salo has a strong focus on serving clients in healthcare, among other industries. The transaction, which is subject to customary closing conditions, is expected to close on Feb. 1. Financial terms of the deal were not disclosed. The acquisition is anticipated to be immediately accretive to Korn Ferry’s adjusted earnings.

“Salo will be a great fit, with highly relevant interim professional offerings and expertise that speak to today’s world of work – a new workscape in which more than one-third of the U.S. workforce alone considers themselves to be independent,” said Mr. Burnison. “The Salo acquisition reflects our continued focus on high-demand areas emerging in this environment, as we scale our solutions at the intersection of talent and strategy.”

“Through the acquisition of Salo, Korn Ferry will further broaden its ability to deliver to organizations experienced professionals, who will take on impactful roles on an interim or project basis, particularly in the high-demand areas of finance, accounting and HR,” Korn Ferry said.

“Now, with Korn Ferry, we will be part of a global network of colleagues, with access to vast IP and more expansive client relationships and opportunities at every turn,” said Lisa Brezonik, CEO of Salo. “Our track record of success and deep interim professional solutions expertise, combined with Korn Ferry’s expansive credentials, will provide clients with greater opportunities to make an impact. We’re excited to be joining Korn Ferry and look forward to what the future holds.”

Related: Korn Ferry Launches AI-Enabled Talent Analytics Platform

Korn Ferry recently acquired Infinity Consulting Solutions (ICS). Terms of the deal were not disclosed. The acquisition is expected to be immediately accretive to Korn Ferry’s adjusted earnings. “Infinity Consulting Solutions will be a great fit, with interim professional placement offerings and expertise that are highly relevant for the new world of work,” said Mr. Burnison. “Today, Boomers are retiring and career nomads are looking for change – early and often. Our clients have entered a new reality where shortages of skilled labor are projected to persist, particularly in high-demand areas such as IT. Korn Ferry’s acquisition of ICS echoes our commitment to scale our solutions and further increase our focus at the intersection of talent and strategy – wherever and however the needs of organizations evolve.”

Korn Ferry Announces Board Changes
Korn Ferry has elected Charles Harrington as a new member to its board of directors and appointed Jerry Leamon as a new non-executive chair. Christina Gold, who has served on the firm’s board since 2014, and most recently as the non-executive chair since 2019, has retired from the board. In addition, George Shaheen retired from the board after more than 12 years of total service, including as non-executive chair from 2012 to 2019.

“We are pleased to have Chuck join our board,” said Gary D. Burnison, CEO of Korn Ferry. “I believe his extensive business experience, technology credentials, and financial acumen will be a great fit for Korn Ferry as we continue our efforts to broaden the scope of our offerings and help companies synchronize their strategy, operations, and talent to drive superior performance.”

Headquartered in New York, with nine offices throughout the U.S., ICS offers interim professional solutions expertise which will further enhance Korn Ferry’s portfolio. ICS is a provider of senior-level IT interim professional solutions with additional expertise in the areas of compliance and legal, accounting and finance, and human resources.

Korn Ferry also recently acquired interim executive solutions provider Patina Solutions Group. “This combination presents real, tangible opportunity for Korn Ferry and our clients looking for the right talent, who are highly agile, with specialized skills and expertise, to help them drive superior performance, including on an interim basis,” said Mr. Burnison. “Patina offers ideal solutions for today’s nomadic labor market.”

Patina brings to Korn Ferry interim executive solutions expertise across multiple industry verticals. Patina’s network of C-suite, and professional interim talent spans functional areas of expertise including finance, operations, legal, human resources, and IT.

Related: Korn Ferry Posts 14 Percent Revenue Increase

Contributed by Scott A. Scanlon, Editor-in-Chief; Dale M. Zupsansky, Managing Editor; and Stephen Sawicki, Managing Editor – Hunt Scanlon Media