Taleo acquires JobPartners: end of party is near

On June 21st, Taleo, the leading talent management Saas company, acquired JobPartners, a French-UK Saas recruitment company. The deal is interesting for many reasons. It marks the acceleration of the consolidation of the Saas talent management space in Europe. Among the Saas talent management companies that started in the early 2000s (JobPartners, Stepstone, Mr Ted, …) very few are still independent. At the same time, the US companies have gone public and raised massive amount of cash on very high valuation

The diagram above shows the relative revenue and gross margins of the 3 US leaders: Cornerstone On Demand (CSOD), SuccessFactors (SFSF) and Taleo (TLEO). Taleo is worth 1,5bn$ and SuccessFactors 2,7bn$. Of course, no European competitor matches them, neither in size nor in valuation. The revenue multiple varies from 5x for Taleo to 16x for Cornerstone On Demand. The market conditions are dramatically different as few if any of the Saas pure play companies are quoted and not with that kind of multiple anyway. The consequence of the difference in market size and financial market conditions is what we are observing now: the acquisition of European companies by US leaders.

From the 8-K of Taleo, we can get a few numbers on JobPartners: the company will bring approximately 10-12M$ revenue GAAP to Taleo (and approximately double that in non-GAAP). It points to a very high contribution of service to revenue at JobPartners; consistent with their positioning serving large accounts, but not quite worth the same. The acquisition at 38M$ gives a multiple of 3,5x revenue. A good buy for Taleo which is valued at 5,5x its revenue. It also confirms that, in absence of strong public market, it is difficult for European companies to get the same kind of multiples as the ones seen in the US.

For the European Saas talent management companies that are not getting acquired by US vendor, the future is not necessarily bright. The three US leaders are investing heavily in Europe building direct sales force and channel across EMEA. They now have more boots on the ground than many competing startup.

Maybe this is the end of the party and time to find a date.

Frederic HALLEY

Comments

[R4]

Hello, everyone! I am a novice here, nice to meet you. Useful article.