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From Partnership To Merger In RPO

On July 18, 2013 Pinstripe and Ochre House announced a merger to become a global RPO player. The combined company, Pinstripe Ochre House, includes TAAHEED and Carmichael Fisher, acquired by Ochre House in 2012 to expand its global RPO capability in the Middle East and North Africa. Globally the combined company has 767 employees and 88 clients served in 43 countries.

U.S. based Pinstripe, established in 2005, serves North American domestic and multinational clients who have employees in Latin America. U.K. based Ochre House serves clients across EMEA and Asia Pacific.

Pinstripe Ochre House began partnering in 2009. Its partnership has been one of the most successful across the RPO industry with a number of joint multi-region clients. Given their success, why merge and when does it makes sense to do so? Before answering this let's first look at a couple of the main reasons why companies partner:

  • Expansion of geographic capability
  • Addition and/or strengthening of services.

In the case of Pinstripe Ochre House, the former was the primary reason for partnering and what made it so successful is the sharing of similar values and focus on providing complementary talent management services.

What Pinstripe Ochre House will gain are more global clients. According to NelsonHall's 2012 RPO market analysis, there is increasing growth in multi-country RPO. Approximately 20% of announced RPO contracts since 2011 have been in two or more continents. Pinstripe Ochre House will be able to accelerate its expansion of multi-region contacts.

Mergers are also beneficial for vendors as opposed to partnerships as:

  • Existing clients can be targeted. In this instance for geographic expansion with already having a proven track record
  • Infrastructure already exists in-country.

Examples of other M&As of RPO capability proving successful are:

  • Randstad acquiring SFN Group in 2011 which included SFN’s RPO business Sourceright Solutions
  • In 2012 Talent2 became private, jointly owned by Morgan & Banks Investments and Allegis Group.  The combined RPO business allegistalent2, which began working together in partnership in 2010 has several multi-region clients including American Express
  • ADP acquiring The RightThing in 2011, enabling ADP to provide RPO, both as a standalone service and also as part of its MPHRO offering
  • IBM's December 2012 acquisition of Kenexa. One new global RPO client has already been obtained, another renewed and several letters of intent obtained in IBM's growth markets.

Whether from a client or vendor point of view, what are some additional benefits you’ve seen of a merger over a partnership?

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