Taleo shops with Vurv

After sitting out an earlier wave of consolidation of on-demand human capital management (HCM) vendors, Taleo will spend roughly $129m in cash and stock for rival Vurv. The deal would double the number of customers at Taleo. The acquisition values Vurv at roughly 2.8 times trailing revenue, a bit lower than other recent HCM transactions. In mid-2006, three comparable deals got done at roughly 3-5 times trailing revenue and Taleo itself trades at about 3.7 times trailing sales. Since the consolidation wave hit the HCM sector two years ago, we have heard that Vurv was being shopped several times.

However, we would note that Taleo and Vurv have a fair amount of overlapping technology, particularly in the offering around employee recruitment. A similar transaction by the one-time HCM market darling, Kenexa, caused a number of integration headaches, which landed it in the penalty box on Wall Street. Kenexa shares currently change hands about 25% lower than they did in October 2006, when it grabbed ahold of BrassRing for $115m.

Significant HCM deals

Announced Acquirer Target Deal value Target TTM sales
May 2008 Taleo Vurv $129m $45m*
Oct. 2006 Kenexa BrassRing $115m $36m*
Aug. 2006 ADP Employease $160m* $30m*
July 2006 Kronos Unicru $150m $40m*

*Official 451 Group estimate. Source: The 451 M&A KnowledgeBase