I had wanted to do a First Take on this acquisition, but for the moment, I do not have the time and will point you to some other sources of information and a few thoughts of my own. Jason Corsello does a nice job summarizing the facts of the acquisition, the history of StepStone Solutions, and why StepStone is interested in MrTed. Naomi Bloom points out some important factors about why recruiting should part of an integrated talent management suite (though we had some doubt about this back in 2005 when we published our initial research on talent management suites, we still think architecturally it is the right way to think about it). She also speculates on additional M&A to come. Here are a few quick thoughts that were not focused on in those blog posts:
- There are few standalone, high-end e-recruitment solution providers left in the market. The march toward talent management suites, at least from the vendor side, continues. The buy/partner options for vendors that do not have an e-recruitment solution today are dwindling.
- While consolidation reduces the number of competitors, it can open the door to new competitors. With BrassRing (Kenexa), Vurv (Taleo), Peopleclick (Authoria), and now MrTed (StepStone) all consolidated at the high-end of the market, it opens the door to credible alternatives. If the Siemens and Bechtel implementations go well, I expect SuccessFactors to make a big push as a high end alternative leveraging its success in employee performance management.
- This acquisition is another example of the impact of Private Equity firms on the talent management market. As Jason notes, Stepstone recently went through a management buy out with HgCapital, a European private equity firm. With Bedford Funding’s purchase of Peopleclick (now merged with Authoria) and Vista Equity Partners’ purchase of SumTotal Systems, Private Equity firms already are major players. We can now add HgCapital to the list. As Naomi points out, we will see a “tiering” of talent management vendors ultimately. It will take critical mass, resources, and a strong sales and marketing competency (not to mention great products) to make it into the top tier.
What do you think? Is this a good thing for StepStone and MrTed? Is consolidation good for the market?