Updated at 12:05 p.m. CT
It’s hard not to wonder what Edward “Ned” Hay would say about the announcement that consultancy Korn Ferry has entered into a definitive agreement to buy Hay Group, the late founder’s namesake consulting firm, for $452 million.
Ned Hay, of course, founded Hay Group in 1943, and, of interest to our readers, was the publisher and editor of Personnel Journal, the predecessor of today’s Workforce magazine from 1947 to 1958. He purchased the magazine from the estate of its former editor, Charles Slocombe. After Hay’s death, his wife, Doris “D.D.” Hay, served as editor in 1960. Ned Hay once said, “The most successful companies of the future will be the ones that take full advantage of improved personnel techniques.”
Only time will tell whether this deal will serve that purpose.
Truth be told, the announcement was of great interest to us, not only because of our history with the Hay family but also because Hay Group’s Chicago office is located on our floor.
While there will be a new owner in Korn Ferry once the deal is completed, the Hay name will remain, according to a news release. The global people and organizational advisory firm intends to add Hay Group to its talent consulting business and rebrand the combined unit as Hay Group.
The combined company will have about 7,000 employees, Gary Burnison, Korn Ferry’s CEO, said in the news release. “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,” Burnison said. “That’s why Korn Ferry is combining with the Hay Group.”
Korn Ferry will pay $252 million in cash and $200 million in company stock. The deal is subject to Hay Group shareholder approval, antitrust clearance and other customary closing conditions.
Stephen Kaye, Hay Group’s current CEO will continue to serve in that capacity once the deal is completed. In a written statement, Kaye said: “We feel this is the perfect combination of two great firms that will be uniquely positioned to help clients achieve their strategic goals and highest aspirations.”
In a research note, Robert W. Baird & Co. analyst Marc Marcon wrote: "This is a transformative acquisition that is consistent with KFY's [Korn Ferry's] long-stated strategy to be the global leader in talent acquisition, development, and strategy. The acquisition clearly differentiates them from any other player in the space. Hay is a well-known, high-equity brand in the consulting world." One negative, Marcon added, is the "timing of acquisition relative to inning of the cycle — would have been better if this had been done three years ago. Obviously, there are growing fears that a slowdown/downturn is upon us globally."