Taking Stock

I don't feel that recruiting firms should be publicly traded firms (I don't have a good reason for this it's just an emotional reaction.

Also I don't think they make good investments either. They are at the mercy of economic conditions and are only as good as their consultants. If one or two key business developers leave it can really hurt their revenue stream.

Also when you are publicly traded you have to answer to shareholders every quarter and that can cause problems from a strategic planning perspective.

Consider Canadian search firm Caldwell Partners. Its stock has been underperforming lately and now is facing pressure from shareholders to do something about it.

"We're not for sale and won't be for sale . . . in any shape, size or form," Douglas Caldwell said yesterday, a day after the largest holder of the company's publicly traded non-voting shares said it is "exploring all possibilities" for maximizing the value of its investment in Caldwell. "We've had no offers or expressions of interest in buying the business."

He added, however, that if an offer were to materialize, "we [would] have an obligation to our shareholders to look carefully at it and have our board scrutinize it."

But Mr. Caldwell, who is also the firm's chairman and chief executive officer, indicated that its focus is on acquisitions -- possibly in the United States -- saying market conditions for such a move have improved substantially after four poor years.

Acquisitions are also problematic in our field. When one search firm buys another what are they buying really? Search firms don't manufacture anything so we have no plants or capital equipment. We have at best fancy offices and a good database. The real value in any search firm are the consultants it employs. But consultants are people and they can't be bought and sold. I was once involved in a merger of two executive search firms. I was with the firm that was bought. Some of us left immediately. The rest stayed for no longer than two years. So the buyer essentially paid a lot of money for a temporary workforce and some resumes.

Not. Real. Bright.

More on Caldwell here

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