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High Levels of HRO M&A Activity in H1 2014 Led by Benefits Administration Acquisitions

Overall H1 HRO M&A activity is up year-over-year, and acquisition activity has increased in nearly all service lines except learning.  

While learning M&A activity was high in H1 2013, this year, M&A activity in H1 2014 was strongest in the benefits administration market, and it’s occurring in both the U.S. and U.K. as vendors strengthen their DC contribution capability.  In the U.K., JLT acquired Ensign Pensions Administration for £9.9m and Aon Hewitt acquired Lorica Employee Benefits.  In the U.S., Great-West has been busy merging its DC administration business with Putnam’s following the reorganization by its parent company, and then acquiring JP Morgan RPS business to further expand its DC administration business.  Elsewhere, Mercer enhanced its exchange services through the acquisition of Transition Assist. 

That primary theme of benefits administration M&A activity on DC administration is further evidenced by Vanguard’s announcement that it is exiting the DB administration business to focus its efforts on DC administration.

There has also been a high level of M&A activity in the RPO market this year.  Seaton and WilsonHCG each made an acquisition to expand their geographic footprint, HRX and CPH respectively, while Alexander Mann and TrueBlue each acquired a company to expand or enhance their service capabilities, Talent Collective (for talent acquisition services) and SeatonCorp (to develop RPO and MSP capabilities) respectively.

Finally within payroll, there were two acquisitions.  Historically, payroll acquisitions are rare, but almost always focus on strengthening or adding capabilities in a new country / region.  In H1, TMF acquired Tass Axia to strengthen its payroll presence in Indonesia, and Visma acquired Adga to strengthen its payroll presence in Sweden.

The level of M&A activity in H1 2014 contrasts strongly with that of last year. Acquisition activity for learning services, was the strongest area of activity back in H1 2013 with Xerox and GP Strategies both making two acquisitions: LearnSomething and Formation by Xerox and Prospero and Lorien Engineering Solutions by GP. This year, learning acquisitions have slowed with just one acquisition by GP, Effective-People and Effective Learning Companies, and the objective of this acquisition is to strengthen GP’s HCM technology capability beyond learning to include recruiting, onboarding, compensation, succession planning, and HR analytics. 

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