Earlier this week Randstad surprised the market by publishing its intent to acquire Monster, the job posting site. The acquisition demonstrates how the talent acquisition market has changed. Vendors that, fifteen years ago, seemed ready for the coffin (Randstad) are acquiring the undertaker with little effort.

But let’s dissect the press release in our customary style, it can be found here:
AMSTERDAM, NETHERLANDS and WESTON, MASS. – August 9, 2016 – Randstad Holding nv (AMS: RAND), a leading human resources services provider, and Monster Worldwide, Inc. (NYSE: MWW), a global leader in connecting jobs and people, today announced the signing of a definitive agreement under which Randstad will acquire Monster. Under the terms of the merger agreement, Randstad will pay $3.40 per share in cash, or a total purchase price of approximately $429 million (enterprise value).
MyPOV – Sums up the deal, Monster was losing money (here the link to its last quarter), so Randstad likely got a good deal. Randstad has declared a ‘reinvention’ strategy and this acquisition is part of it. More below.

By leveraging Monster’s multiple distribution channels to bridge two different but complementary parts of the extended recruiting industry, Randstad intends to build the world’s most comprehensive portfolio of HR services. Monster will continue operating as a separate and independent entity under the Monster name.
MyPOV – Describes well what Randstad is up to – grow its portfolio of HR Services, and be more than the vendor that comes in the picture for temporary workforce usage. As described, the talent acquisition capabilities of Monster can also help recruiting a contractor workforce, so there may well be synergies on paper and in business, but the new combined entity need to create them first. 
“In an era of massive technological change, employers are challenged to identify better ways to source and engage talent,” said Jacques van den Broek, CEO of Randstad. “With its industry leading technology platform and easy to use digital, social and mobile solutions, Monster is a natural complement to Randstad. The transaction is aligned with our Tech and Touch growth strategy and reflects our commitment to bringing labor supply and demand closer together to better connect the right people to the right jobs. We look forward to welcoming the Monster team and working together to shape the evolving global job industry.”

MyPOV – Good quote from van den Broek, aligning it with the Randstad strategy of ‘Tech and Touch’ – where Randstad does not shy away from technology acquisition to bolster its overall ‘human touch’ service portfolio.
“Joining Randstad provides a unique opportunity to accelerate our ability to connect more people to more jobs,” said Tim Yates, CEO of Monster. “Together with Randstad, Monster will be better positioned to fulfill our core mission, and our employees will benefit from becoming part of a larger, more diversified company. Equally important, this transaction offers immediate value to our shareholders. We are excited to join and be supported by Randstad, as we continue to build the best recruiting media, technologies, and platforms. We look forward to working with the Randstad team to ensure a smooth transition.”
MyPOV – Also good quote by Yates, showing the potential for Monster as being part of Randstad. And that is tremendous, Randstad is more European than Monster, so growing in Europe is a tangible opportunity for Monster.

Strategic and Financial Benefits

Brings Together Complementary Visions to Lead Transformation: Randstad and Monster have a shared vision for the global job industry, which is rapidly transforming as a result of technology advances. The transaction is intended to accelerate their ability to develop new and innovative capabilities that deliver greater value to job seekers and employers by bringing labor supply and demand closer together.
MyPOV – Always good to hear about vision compatibility, but it will be better to test and see that on a joint roadmap. Too early for now but should be there in the next quarters.
Creates Most Comprehensive and Technologically Advanced Capabilities for Human Resources Services: Randstad continues to enhance its business model in the rapidly shifting landscape, placing annually more than 2 million people worldwide through its network of more than 4,500 branches and client-dedicated services. With the addition of Monster’s leading recruiting media, technologies, and platforms which connect people and jobs in more than 40 countries, Randstad intends to further expand its services to offer both clients and candidates tools for increased efficiency and engagement, connecting more people to more jobs. […]

MyPOV – Good description of what Randstad is really up to – and how Monster fits into the picture. There are certainly synergies between the two vendor – we will look at it below.


Implications, Implications…

Let’s look at the implications that this acquisition has for the different constituents of the HCM market:

Implications for Randstad customers

There are no immediate implications. There is no overlap or potential functionality that may be replaced by Monster on the Randstad side, if a customer still thinks so and sees that (Randstad operates in 20+ markets and has different capabilities in each of them), then it is time to contact Randstad and understand the implications. As usual, Constellation recommends to get everything in writing in regards of operation of products and capabilities that may now be in question. In a few quarters it will be interesting to see how all the many acquisitions that Randstad has done in the last 12 months will come together.

Implications for Monster customers

There are two areas of good news – Monster is on much better financial feet and Randstad has said it will keep operating the Monster business as a business unit and under the Monster name. Everything else would be unproductive from a brand recognition and overall market value position. Even though it is not fully clear at the moment what the new ‘Randstad Monster’ will do. Clients should reconfirm roadmaps, future items and SLAs. It is unlikely that anything will change or even deteriorate in the short term, but enterprises should ask the new Randstad owned Monster what the new positioning and capabilities will be. Adding more temporary worker recruiting capability could be a welcome addition for enterprises that use or plan to use temporary workers. If that is not in the future of an enterprise, it is time to take a hard look how good longer term the Randstad permanent worker acquisition tools will be.

Implications for Partners

There is no expectation of an immediate impact, though any partnerships that Monster may have had with Randstad competitors will get some scrutiny. Let’s hope the adults are at home and all we be handled in a way where the customer must win, which is always a good true north for companies in acquisition mode.

Implications for Competitors

This is an interesting move and may give the executives at Adecco, Kelly Services, Manpower, Robert Half and more some food for thought. If Randstad can become more strategic for HR decision makers and enterprises overall, then all will have to react. In the meantime, they may sit on the sideline and hope Randstad may get distracted and may not deliver, but that’s a risky strategy. There are enough Monster competitors with similar structural market challenges – their valuation maybe on the rise.

Overall MyPOV

Randstad is going through a transformation, trying to become more than the trusted staffing partner. The vendor as acquired and made a number of investment, just in the last quarters it acquired RiseSmart (see here), entered Talent Management with twago (see here), and changed its staffing need e.g. with Careo Group in Japan (see here) or Obiettivo Lavoro in Italy (see here) and most recently in France with Ausy (see here). On top of that Randstad is open to disrupt itself with putting no limits on the investment objectives of the Randstad Innovation Fund (see here). These are serious investment, that are changing who and what Randstad is. Tucked in the Monster press release is a statement that the pace will not remain as frantic, as Randstad expects ‘only’ expenditures on acquisition to be around 100M Euro. Certainly good to see as buying goes faster than integrating, educating the market on new capabilities, training sales people and getting the first lighthouse customers.
And that also leads to the concern side, Randstad may have chewed up more than it can handle. On the flipside it is a very large company with deep pockets on stable revenue stream. The other concern is that Monster has been on steady decline since more or less 2000. Very similar to recently acquire Yahoo! When the web property was the one and only place where business would be done. But recruiting has changed, not just with the rise of social networks like Facebook and Linkedin (my take on the acquisition of the vendor by Microsoft here) for how Recruiting should (and will work) see my post here. So Randstad may have acquired the 'yesteryear' best practices vendor. 

But overall it is always a good sign when a vendor is trying to make it easier for customers, and that is Randstad’s leitmotiv here, with the genuine business interest of becoming more strategic for its customers and prospects. It has to bridge a traditional 'moat' in the enterprise software landscape - as staffing, job sites and HR vendors have not come together in the past. Now we will have to see if Randstad can deliver on the vision, it has made the acquisitions and has the resources to make it happen. We will be watching.

More on Randstad:
  • Progress Report - Randstad Sourceright - Good Progress and the beginning of a balancing act – read here

More on Recruiting
  • Musings - How Technology Innovation fuels Recruiting and disrupts the Laggards - read here
  • Musings - What is the future of recruiting? Read here
  • HRTech 2014 takeaways - read here.
  • Why all the attention to recruiting? Read here.
Find more coverage on the Constellation Research website here and checkout my magazine on Flipboard and my YouTube channel here

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