Randstad Holding NV, the second largest staffing and recruiting business in the world, announced this week it has entered into an agreement to acquire Monster Worldwide Inc., one of the first job boards launched in the mid-1990s. Randstad will acquire Monster for $429 million in cash, or $3.40 per share, representing a 23% premium relative to the Monster’s closing share price on Monday.
At a high level, this acquisition fits two patterns in evidence among larger staffing businesses.
The first is the trend among these firms to diversify their offerings beyond core staffing and recruiting toward more of a portfolio of human capital management services and solutions, including managed service providers (MSP) and recruitment process outsourcing (RPO). This is being done, in part, as a way to manage the talent supply chain rather than acts simply as a supplier. Randstad obtained RPO provider Sourceright as a part of larger acquisition, in 2011, as well as outplacement solution firm RiseSmart, in 2015. These collective transactions represent moving “up the value chain” for staffing and non-employee human capital, in theory driving higher margin businesses and becoming more strategic, embedded solutions with clients.
The second is an emerging trend among these firms to invest in or acquire more technology-based businesses. The Monster acquisition is certainly an example. Additionally, Randstad has been investing in more early stage technology-business through its investment arm, the Randstad Innovation Fund, including online work intermediation platforms as well as other pure play technology companies. Recruit Holdings of Japan, a Randstad competitor, has followed a similar pattern, by acquiring job search and recruiting site Indeed for $1 billion in 2012, as well as other technology investments.
Spend Matters Analysis
Monster’s exit through acquisition has long been expected. The job board giant and household name in recruiting circles, which had a market cap of nearly $8 billion in 2000, has seen its fortunes steadily wane over the years with competition from the likes of CareerBuilder, LinkedIn, Indeed and others.
Randstad’s acquisition comes as a bit more of surprise and is perhaps more difficult to explain. Financial fundamentals would seem to play a small part, if any, in explaining the acquisition, considering the stiff premium paid above market cap. More likely, the acquisition is based on Randstad’s valuation of the Monster assets, starting with a customer base (of enterprises, staffing companies and recruiters) and a massive reservoir of talent data and links to both active and passive talent. Mining, cleansing and exposing the database of talent profiles and activity histories, in particular, could be extremely valuable in the context of growing talent shortages and skill gaps.
In fact, Randstad has certainly shown a facility for re-leveraging assets into various business use cases (most recently with Gigwalk within Randstad Japan and twago within Randstad Sourceright). Monster houses some recent technology acquisitions, including TalentBin, which is likely a high-value asset. Monster also invested in the development of semantic search technology with 6sense, created by a team of Monster technologists in the Netherlands. 6sense was productized in the solution called Power Resume Search, but the value and reuse potential is most likely in the patented technology. In response to the rise of social network recruiting solutions — especially LinkedIn — Monster developed and launched BeKnown, an application that enables social network recruiting within Facebook.
On the surface, one might see Randstad’s acquisition of Monster as merely another event in a trend of consolidating mature businesses in the established talent supply chain. This is not incorrect, but there is more than meets the eye.
Changes in what businesses need, talent supply constraints, demographics of talent and digitization have been increasingly transforming the talent supply chain. Technology has not really been a disruptor but more a catalyst to gradual supply chain innovation. Perhaps more important, well-resourced talent supply chain players like Randstad are attempting to harness these developments and reconfigure both old and new supply chain assets into innovative, often more technology-enabled, talent access and delivery solutions.
This is a dynamic and ongoing set of developments occurring under the but critical for contingent workforce procurement and supply chain practitioners to get ahead of. And more important than just observing and understanding the reconfiguration and digitization of talent supply chain assets is being active participants in shaping those developments — not leaving it all to the suppliers to design and offer. For more on this trend of talent supply chain evolution, see The Digital Evolution of the Contingent Workforce Supply Chain: What Does It Mean? (Part 1).
Given the growing complexity of staffing assets and staffing firm business models, procurement and HR practitioners tasked with managing the contingent workforce and other new sources of talent (e.g., freelancers) need a blueprint for engaging providers to get the most from relationships. In certain cases, the solution provider's account executive or client manager will not have a complete knowledge of all of the new assets their organization can provide. This is where a well informed, technology savvy procurement or HR practitioner with a more complete view of the provider can play a value-added role for their internal stakeholders.