Acquiring Staff Service Holdings (2007)

The price of an acquisition that “buys time” — and what followed

The heart of this acquisition appears to lie in buying time with money. In staffing, competitiveness turns on the quantitative securing of registered staff and client counts, and for the fifth-ranked Recruit to catch the leader on its own growth would have taken a long time. By acquiring the unlisted top player whole, Recruit gained scale, a network of bases and a registration base in one stroke, sharpening its shift from a magazine-centred image toward a comprehensive human-resources company. The reported price of about $1.4B (¥170bn) drew a view that it was pricey against the market value of listed peers, yet the aim of this decision can be seen in its having, for the moment, achieved a reversal of quantitative standing.

That said, its launch met misfortune. Just nine months after the acquisition, the Lehman shock sharply cut demand for temporary staffing, and the growth scenario drawn on the premise of expansion was forced into early revision. In terms of the timing of the acquisition, it coincided with about as harsh a phase as could be. Even so, the base built through scale integration remained and was carried forward into the later concentrated investment in the human-resources field. The difficulty of what to buy and when, and the fact that acquiring scale can nonetheless define a long-term business structure — this acquisition reflects both at once.