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Korn Ferry has entered into a definitive agreement to acquire Philadelphia-based management consulting firm Hay Group, at an aggregate purchase price of US$425 million.
The closure of the transaction will see Korn Ferry combining Hay Group with Korn Ferry’s Leadership and Talent Consulting (LTC) segment, and branding the combined advisory business as Hay Group.
Stephen Kaye, CEO of Hay Group, will continue to serve in this capacity with Korn Ferry.
The resulting company is expected to be organised along three business lines: executive recruitment, Hay Group (all Hay Group colleagues and Korn Ferry’s LTC colleagues), and Futurestep.
This will be applicable to all four business regions, North America, Latin America, EMEA and APAC, with a total of about 7,000 employees.
The acquisition is subject to approval by Hay Group shareholders, regulatory review, and other customary closing conditions, with Korn Ferry expecting a close date before the end of calendar year 2015.
Both firms will continue to act as separate and independent companies until the closing.
In the purchase price, approximately $252 million is valued in cash, while the remaining $200 million is valued in the company’s common stock.
Gary D. Burnison, CEO of Korn Ferry, commented: “Since the beginning of time, people have been the ultimate differentiator. Yet today, this simple truth is all too often plastered on office walls, but rarely acted upon in the halls. We need a new conversation on people.”
“That’s why Korn Ferry is combining with Hay Group – knowing that when people align to a strategy and are developed and empowered to succeed, anything is possible.”
Kaye of Hay Group, added: “We are delighted to be joining Korn Ferry.”
“In Korn Ferry we have found a like-minded partner committed to enabling stellar business performance through people and organisational effectiveness.”
Human Resources spoke to Charandeep David, head of learning and development at Aircel Academy, part of Indian telecom major Aircel, on the impact of such developments on potential and existing HR clients, and whether this means less competition for them to choose from.
She was of the view that such mergers and acquisitions can, in fact, benefit the intended consumers.
“Sometimes we get the benefit of both (providers) under the same umbrella rather than going shopping to various shops for different items. This is provided they have that variety to offer post the M&A.”
She also recommended that merging organisations should ensure complete transparency and keep clients in the loop about what is going to change for them, in order to retain a them successfully.