Last week, I ran across the name of a HCM technology solution provider that was at one time considered a“disruptor” and has since been acquired and forgotten. This story is not unique. Start-ups or smaller providers with innovative solutions are often gobbled up and ignored by larger solution providers. According to a study by Harvard Business Review several years ago, companies spend more than $2 trillion on acquisitions each year and close to 90% of them fail. As analysts, part of our job is to write about these acquisitions and analyze whether they make sense for both buyers and the overall market. But, it is important to also follow-up post-acquisition to see what went wrong and what went right.
For the purposes of this blog, I want to focus on several acquisitions in the HCM technology space that “went right” and offer some lessons learned for future providers looking to acquire or get acquired. With nearly half of organizations planning to increase their investment in both learning and talent acquisition technology over the next 12 months, market consolidation is a reality.
A few HCM technology success stories:
- Monster Acquires TalentBin: As the job board business is becoming stagnant, Monster made a bold move by acquiring TalentBin, a search engine that helps companies find, engage and build a talent pipeline. TalentBin by Monster has grown since the 2014 acquisition and now supports over 100 million public, tech-focused profiles aggregated across 100+ websites.
- SAP Acquires SuccessFactors: This acquisition in 2011 made a significant impact on the talent management market. For SAP, this acquisition was strategic in building its cloud portfolio. Today, cloud sales remain a priority for SAP. My colleague, Kyle Lagunas, attended SAP’s conference in San Francisco last week and learned that SuccessFactors cloud sales is the priority.
- SHL’s Acquisition of Previsor: This merger from 2011 of assessment providers SHL and Previsor made sense. Previsor was focused primarily on pre-hire assessments targeting North American organizations while SHL was a global post-hire assessment organization. By combining these solutions, SHL now has the largest market share of any assessment provider in the HCM technology space.
Strategies for Success:
- Understand Who You are Acquiring: Organizations must understand the provider they are acquiring and how this new set of products will help grow their business or fit into their existing strategy.
- Have a Plan in Place: An acquisition should do more than cause a stir in the market. It should be a developed plan to broaden a suite of products or to meet the demands of customers. This seems like a basic requirement. But hidden agendas often drive these acquisitions.
- Integrate with Other Solutions in Portfolio: Most acquisitions have failed for talent management providers when they acquire a company but have no way or no plan to integrate those products with their existing suite or portfolio. Providers must consider how integration will impact existing customers and also future customers.
- Understand Company Culture: During an acquisition, conflicting company cultures can have a serious impact on revenue, client satisfaction and retention. When making an acquisition, organizations must understand cultural differences and create a plan to make the transition as smooth as possible.
- Take a Risk: Several of these acquisitions were safe, while others were a risk. Solution providers sometimes need to step outside of their comfort zones in order to expand their customer base.
What are your thoughts on HCM technology acquisitions?