Thursday, March 4, 2010

It's gettting very busy out there

NorthgateArinso buys Convergys HRO business for $100M. Skillsoft going private for $ far. Authoria (Bedford) buying PeopleClick for $100M. SuccessFactors buying Inform for $40M. All this M & A action and we have just entered the month of march. This has to be some sort of record for M & A in the HR software space.

A few quick thoughts on these very different deals:

  • HRO is just a shitty business. Sorry if I offended anyone, but it's the truth. A struggling ATS vendor, PeopleClick, gets priced at 2x ttm revenues. Convergys HRO gets priced at ~0.4x ttm revenues. That's right! The same price was paid for PeopleClick doing $50M in revenues vs. Convergys HRO doing $250M. Good luck NorthgateArinso, at least it was cheap.
  • Skillsoft going private via a LBO. I don't follow this company too much as it's on the edge really of the HR technology market, but I don't think this situation is similar at all to the SumTotal nor the Authoria "take privates". Some learning analysts have speculated that the courseware market is tapped out and that Skillsoft will alter their business model as a private company. I think that there is something to this idea, primarily because Skillsoft was hardly a damaged company. Upon review of its financial data, its growth has slowed dramatically, but it is still highly profitable and fairly well valued. This one could be really interesting.
  • PeopleClick Authoria. All I can say is that I have privately spoken to many people about this since it was announced, and to a person, they have felt that this is a ridiculous deal. Some of those folks are well know industry pundits, who published generous assessments publicly. I too think it is ridiculous and that Beford Funding hasn't a clue. I think Jason Corsello was very fair in laying out the issues in his post on his blog
  • SuccessFactors...see my previous post.

The question continues to be "who and what is next?"

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