The Corporate Executive Board Company (CEB), a leading member-based advisory company,recently announced that it has signed a definitive agreement to acquire SHL, a global leader in cloud-based talent measurement and management solutions, from funds managed by HgCapital and Veronis Suhler Stevenson ("VSS") for $660 million in cash, subject to customary pre- and post-closing adjustments.
CEB is a provider of business research and analysis, while SHL provides testing for companies worldwide and counts blue-chip corporations including Barclays PLC, Coca Cola Company, and Hilton Worldwide among its clients. SHL delivers around 25 million talent assessments annually in over 30 languages, and had revenue of more than $200 million last year.
London-based HgCapital took SHL private in a buyout worth $187 million in 2006 and subsequently merged it with Previsor, a U.S.-based competitor, in January 2011. The sale nets HgCapital more than three times the cash it put into its original acquisition and represents a gross return of 26 percent for the private equity firm's investors.
According to the CEB press release: "The combination brings together two highly complementary businesses to create the world’s foremost source of insight on the measurement and management of talent for business and government. Marrying CEB’s rich best practices, insights and data with SHL’s assessments, predictive analytics and robust technology platform will create a global organization with a greatly enhanced capability to help clients manage talent, transform operations and reduce risk."
"SHL is a very high quality business, recognized in its industry as the clear global leader," said Lisa Stone, a partner in HgCapital's Portfolio Management team. "The management team has done a tremendous job in growing and developing the business and I am delighted that SHL is finding a new home with CEB where it has a strong strategic fit," Ms. Stone added.
CEB's client and member network includes 85 percent of the Fortune 500, 50 percent of the Dow Jones Asian Titans, and 70 percent of the FTSE 100. It spans more than 50 countries, 5,700 individual organizations, and 225,000 business professionals.
“SHL's established global customer base and rich talent analytics, its leadership position in corporate-talent measurement and its proven business model--which delivers highly recurring revenues, attractive sustainable margins and strong cash flows--make it a compelling strategic and financial fit for CEB," said CEB chief executive Tom Monahan.
The deal is expected to increase CEB's full-year earnings in 2013 and generate pretax cost synergies of $5 million starting in 2013. CEB expects cash flow to remain sufficient to maintain the company's current policy of dividend growth.