2005 Year-End M&A Activity in The HR Space!

For those who missed these announcements, here is a summary of some recent M&A deals announced in the HR space.

1. Kenexa announced on December 21st 2006 that it will buy Webhire for about $34 million in cash. This represents about a 2X revenue valuation based on Webhire's annual revenue of about 17.34 million. Webhire's current market cap is about 27.13 million.

2. First Advantage Corporation (NASDAQ: FADV), a global risk mitigation and business solutions provider, announced the acquisition of TruStar Solutions, Inc., an online talent acquisition services firm. The addition of TruStar Solutions' services expands First Advantage Employer Services' portfolio, which provides employers with hiring solutions that now encompasses recruiting strategies, applicant tracking, tax credits screening, background screening, substance abuse testing and more.

3. Long Term Care Group, Inc., the country's largest long term care insurance administrator, announced it has closed on a transaction to acquire Nation's CareLink, a national provider of underwriting and claims assessments and care management services.

4. PAI Group, Inc. announced the acquisition of five companies to create the firm's newly established payroll processing division which will operate under the name PayChoice. The companies acquired by PAI Group, Inc. include: Payrolls Plus, Inc. of Danvers, MA, Payroll Associates of Dallas, TX, PayChoice division of ECI of Elkhart, IN, Payday Solutions of Louisville, KY and PromptPay, Inc. of Buffalo, NY.

5. Kronos announced details on the nearly $75 million they spent on acquisitions in 2005. Kronos has been acquiring North American resellers of its software the past several years, with only four remaining in the United States. Resellers accounted for $6 million of Kronos' $519 million in revenue during its fiscal 2005 period ending Sept. 30. In its annual report filed Dec. 9, Kronos disclosed it spent $31 million in September to acquire CTR Systems Time and Attendance Inc., which resold Kronos applications in Pennsylvania. The company also revealed it spent $17 million in February to acquire NexTime Inc., a Tennessee reseller.

6. TALX acquired Business Incentives Inc., doing business as Management Insights Inc., for $24 million. The Dallas-based, 25-year-old Management Insights is expected to have annual revenue of more than $9 million. Management Insights is a provider of tax credit and incentive services

7. Barrett Business Services, Inc. (Nasdaq:BBSI) announced that it has reached an agreement in principle to acquire certain assets of Pro HR, LLC, headquartered in Boise, Idaho, effective January 1, 2006. Pro HR, LLC, a privately-held professional employer organization (PEO) company, operates three offices in Boise and Rexburg, Idaho, and Grand Junction, Colorado. Pro HR has estimated its 2006 gross revenues will total $110 million.

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Oracle's Upcoming Fusion Software

A recent CIO-Today article titled "Fusing Human Resources Technology at Oracle" discusses Oracle's upcoming Fusion software (planned to be released in 2007) which Oracle basically describes as a melding of the best features of Oracle's HR applications, PeopleSoft (who Oracle acquired in 2005) and JD Edwards (who PeopleSoft acquired in 2003.)

The new application will apparently include "dashboards" designed to give managers a single screen full of useful workforce data - the Holy Grail of what these HR ERP solutions should be all about but has too date been non-existent.

Although the article includes a lot of hype and hard-to-believe promises, it is a well written and very informative article about Oracle's plans for their HR software business - something that the traditional HR trades have not done a great job reporting on. Check it out!

‘Tis the Season (to share our success factors - what are yours?)

DISCLAIMER: This posting is not supposed to be a self-serving sales pitch. We are quite humble about HRmarketer's success over the last four years. We’re well aware of the fine line between success and failure and smart enough to never take our business and our customers for granted. We also know success always involves a little luck. That being said, here are some things we've learned about our success…

We recently reported 40 consecutive months of profitable sales growth.
That's outstanding and every member of the HRmarketer team is partly responsible for making this happen. We are all proud of the job we do and I am especially proud of each and every member of our team for their unique contributions. Recently I spoke to our team about some of the reasons I thought HRmarketer has been successful. I think it's important to remind a team about the fundamentals of success and how quickly a business can deteriorate when the core fundamentals are ignored. I want to share these comments with you (our readers) because I think you and your companies can benefit. Also, since most of us are in the business of selling to HR, we should understand more than most firms what it takes to run a successful business.

The three main reasons HRmarketer.com has been successful are:

1. We offer a quality product
2. At a fair price
3. And we provide outstanding customer service

So what does HR have to do with this? Everything. Let's look at each of these three success factors.

Most employees usually have little or no say in setting pricing accept to report feedback if they receive complaints or other interesting information about pricing from customers or prospects. But every member of a business has control over #1 and #3 above – quality and customer service. In fact, on a day-to-day basis, it is every employee's responsibility and duty to insure the company is offering a quality product and providing great customer service – from answering the phones to developing new products, responding to sales leads, addressing client needs, supporting an internal department, etc. And HR must help drive this process and ensure it is culturally intact and employees are empowered and accountable at all levels for quality and excellence in customer service.

At our company, 99% of everyone's day is spent on activities that support these two success factors – quality and customer service. It is the responsibility of our management team to ensure (a) that their team knows what their day-to-day priorities and responsibilities are that support these success factors, (b) that they are not bogged down with tasks that interfere with accomplishing these activities, and (c) they have the tools and resources to accomplish these activities.

If management is providing all of the above, an employee can and should be held accountable for their area of responsibility. If management is failing to provide any of these three, the employee is responsible for letting their direct report know about it – and something is done about it.

Remember, survey after survey shows that great employees don't quit companies (e.g., poor salary, bad benefits); they quit people (poor bosses, bad leadership). And the reasons are usually because the company they work for doesn't do what was just discussed above.

Every company is different and your key success factors may be different than ours – but every employee should know what your company's success factors are, spend most of their time on tasks that support these success factors, and be given the tools to do so. And as companies who sell to HR, you should know better than anyone the importance of this. Your products and services should, in some small way, reflect this and help companies accomplish this.

Happy Holidays!