DHR/CT Partners Merger: Who cares?

Generally speaking, when owners of a business form a committee to consider their "strategic options," everyone needs to take cover or head for the exits because it's a clear sign no one knows what they're doing.

Except, of course, if you represent middle market firms active in executive search, or Search as the industry's long-time players like to refer to themselves. Recent news http://nypost.com/2015/02/23/embattled-ctpartners-faces-potential-takeover-by-rival/ that CT Partners has formed a committee of its own board members to consider options, including a hostile bid from DHR International, is the latest update in a saga that pits two small firms trying to compete against larger players. See an earlier posting here: http://povblogger.blogspot.com/2015/02/dhrs-hostile-bid-for-ct-partners-search.html.

To paraphrase one of Search's all-time seminal figures, deals are about personalities just as much (if not more so) than numbers. In CT Partners' case, the personality is CEO and primary owner Brian Sullivan who has been targeted in a sexual harassment case pitting female partners against what they're claiming is rogue behavior and unfair treatment in the workplace -- on Wall Street. Smart, blunt and controversial, Sullivan suffers no fools. DHR International's main personality is actually a Father/Son tag team: Father, or Chairman David and son, CEO Geoff Hoffmann. In previous cycles, Dad was spinning about how complementary the two firms would be in Europe and Chicago where combining the offices would save money. Really? So much so that industry reports now buy into the rationale. Dad even went as far to say to the NY Post that "the lawyers are negotiating non-disclosure agreements" referring to the potential deal.



Brian Sullivan

David Hoffmann

Even if this merger of so called equals were to take place, it doesn't add up to much other than vested interest. And clearly not enough to change the industry. A combined entity wouldn't even equal six months of revenues at Korn/Ferry International (NYSE: KFY), which is now the "industry leader" should that status still even matter. Long-time rumors about Korn Ferry combining with another large firm have remained just that largely because the economics and cultural issues that would arise from merging with another firm don't make sense. Plus the obvious: Going alone seems to be working just fine.

The only merger that would make any difference is if Heidrick & Struggles (NASDAQ: HSII) were to combine with privately held Spencer Stuart. Heidrick's year-over-year earnings, reported earlier this week, remained relatively flat while Spencer Stuart is firmly entrenched in the Fortune 100 CEO and executive suite, where Search has traditionally made its name. There are a few exceptions, but for the most part, lay of the land remains the same despite continued need for consolidation. Ironically, the industry that hyped the "War for Talent," now finds itself in one as veteran partners are staying put instead of taking the risk of losing brand name position established by their firms.

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Dupont: Quote of the year (even though it's early)

http://www.wsj.com/articles/stock-sales-by-dupont-ceo-raise-eyebrows-1423528311?mod=WSJ_hps_sections_management

Following is a quote from a governance expert commenting on recently disclosed stock sales by Dupont CEO Ellen Kullman, which coincided with activist Nelson Peltz's announcement that he and his firm, Trian, were seeking a split of Dupont's main businesses as well as additional board seats. The Dupont board rejected Peltz's board ideas earlier this week.

"It's either dumb luck or dumb bad luck, depending on how you look at it," said Frank Glassner, chief executive of Veritas Executive Compensation Consultants.

The stock sales, which were pre-arranged through a special program, happened last September and occurred nearly on the same day as the material news was reported, according to the Wall Street Journal. The company went to some lengths to say Kullman still owned more than her fair share of shares as if anyone in the general public understands ownership requirements for a CEO.

Here's what they do understand: When something looks bad, and it involves millions of dollars being rewarded to someone who is already making 400x the average employee, then perception is reality. And vice versa. Pay gaps and lack of #transparency# remain hot button issues. Put them together and you have a cauldron.

While the stock sales were not 'egregious' as another analyst put it, the fact that the transaction coincided so closely with material news obviously raised a few feathers.

Some loyal TGR readers will recall Kullman was responsible for the 2013 quote of the year: "We need certainty so we can plan." Looks like she finally earned some certainty. Read more here: http://povblogger.blogspot.com/2012/12/dupont-ceo-quote-of-year-2013.html.

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#Hash Tag -- you're it#

Note: Following was originally distributed as a client letter on February 6, 2015.

 

Dear Clients and Colleagues:

 

Did you know that more than half of the ads in the most watched, highest socially engaged Super Bowl earlier this week contained a hash tag? If you ask, “What’s a hash tag do?” then you’re behind the curve. If you don't care then you're somewhere in the safe middle. Good news is a potential antidote for media saturation follows should you choose to keep reading.

 

Social media is now a fully developed norm despite generational gaps that are closing pretty quickly. While some continue to compartmentalize lives on Facebook, a majority of business professionals have either used LinkedIn or have instructed someone else to improve their profile and add connections to get a better job. Twitter, a micro-blogging service, gets credit for inventing hash tags, which are generally tag lines set apart by hashes or number signs to describe something product-driven happening in real time. For an easy reference guide, turn on any network show in prime time and look down in the right hand corner of the screen for the tag otherwise known as Hash.

 

Here are three appropriately tagged issues that are going to define 2015 from (a leadership) POV:

 

#Transparency# is the most vexing issue facing leaders of major companies and institutions today. In another five years, whether information is conveyed freely, voluntarily and without hesitation will define brand reputations. Private is now public, and the reverse also is sometimes true. This issue can be complex, controversial and challenging to old legacy and new brands alike. Consider the NFL, Sony Corp. and Uber for recent examples. Transparency has a darker side, too, as evidenced by brutal tactics employed by terrorists.

 

#Authenticity# drives transparency. The opposite of authentic is phony. Space between these two points can create a challenging chasm at times, particularly when crises hit. To re-define an old saying -- you know leadership when you see it – authentic is self evident as long as you’re looking for the right cues. Great example: Chris Kyle played brilliantly by Bradley Cooper in "American Sniper."

 

#Selflessness# is defined as being able to set aside self-interest long enough to listen to, help and serve the needs of others. Selfless leaders are in short supply and on limited display, which may be intentional. Truett Cathy, the late founder of Chick-fil-A, is difficult to beat for an example of great selfless leadership. Pope Francis is another selfless leader. There are no brand name examples in current domestic political circles -- or at least none that leap to mind. Serve or be served will define #selflessness#.

 

Look forward to hearing your views on these topics and more -- either on-line or off line. More on these tags in the previously mentioned social networks. No Instagram or YouTube yet so you're safe for now. Exhale,

 

JG

Jeremy C. Garlington
Point of View LLC
4060 Peachtree Rd./Suite D-#117
Atlanta, GA, 30319
Phone: 404-606-0637
Web site: www.pointofviewllc.com
TGR web log:  www.povblogger.blogspot.com 

DHR and CT Partners: Search Dwarfs in Alley Fight

When you're supposed to be the "highly esteemed, trusted advisor" to major companies and their boards, nothing is more unseemly than when bad hubris breaks out over your own business practices.

Unfortunately, this is the case with this week's reported hostile bid being made by DHR International to acquire CT Partners in a cash offer of $60 million, according to the New York Post's Kevin Dugan. See latest cycle here: http://nypost.com/2015/02/05/troubled-ctpartners-gets-takeover-bid-from-rival-recruiter/.

Neither Search firm is worth that much, nor do they even add up to a fraction of the top ranked firms, but that's beside the point. Hostile bids impact prices in ways that are completely irrational, which in this case, could also now describe the transaction's tone.

Deals are as much about ego and personality as numbers with the latest example raising the truth of that statement almost as quickly as a market index.

Consider this choice excerpt from the previously linked story: 'Obviously, we don't have a high opinion of Brian as an executive or as a person,' David Hoffmann, chairman of DHR, told the Post. 'Yeah, we think a big part of the problem is him.' 

(Side note: According to DHR's web site, Hoffmann's son, Geoff, the firm's CEO, appeared earlier today on CNBC and Bloomberg to discuss "hot jobs in the CEO suite." http://www.dhrinternational.com/about/news-media/what-are-hottest-jobs-c-suite-executives.)

Now, back to Dad for a minute. Why would anyone in a leadership capacity say something that personally disparaging in a public statement that risks legal suit? Especially when they're the ones who are trying to acquire the other firm? That's not leverage. Hostile or not, lawyers or no lawyers, this lack of decorum leaves a lot to be desired. Each side needs to work through the process professionally and with discretion. Set the personal aside even if the accusations may turn out to be true from your own point of view.

No matter what these players think is at stake, there's something larger here that needs to be observed. If you need help figuring out what that is, then chances are it's a good time to take a step back yourself. Transactions at all costs rarely add up to anything resembling long-term value.

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