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July 17, 2015

Do the Caldwell Partners Board have a duty to deal with DHR International?

The DHR International/Caldwell Partners International battle continues to remain hot. Everyone agrees that the prime obligation of the Board of Caldwell Partners International is to enhance shareholder value. Where disagreement arises is how the Board needs to discharge this obligation.

DHR argue (supported by their PR company, Hunt Scanlon) that to do this, the Caldwell Board need to accept the DHR takeover offer. That is nonsense. Why? Because the Caldwell Partners' fee earners, who are the core asset of the business, are unambiguous in saying they do not want to work for DHR International, the 'ISIL of the executive search world'. This means that if there were to be an acquisition by DHR, these individuals would leave Caldwell/DHR thus deflating the purchase price and destroying value for Caldwell's shareholders.

The best proof of this is the way DHR's fake acquisition ploy for CTPartners played out. Within a couple of months, almost a quarter of the CTPartners consultants (particularly the big billers) left the firm to avoid joining the unethical DHR. If you add to this the number of consultants who declined DHR International's offers to join after the collapse of CTP, you will find there were very few who ended up joining. As it stands today based on DHR's own web site almost three weeks later, under 4% of the CTP consultants have professed to joining DHR and these were generally the poor performers who have not yet found a job anywhere else. We think the final number will be around 10% of CTP consultants. Even Hunt Scanlon's exaggerated numbers (provided by DHR) suggest that DHR secured only 27% of CTP consultants (or 75 out of 278 consultants who were at CTP prior to the DHR scam).

In other words, if DHR paid the CTP shareholders for this pseudo-acquisition (rather than doing a grubby deal with CTP's lenders), DHR would have paid a significant discount to the share price prior on the day that DHR launched its fake acquisition bid.

So, we applaud the Caldwell Board for their stance on DHR. They have the benefit of seeing DHR's track record in fake takeovers and know that DHR are doing this to destabilize Caldwell and to remove a competitor rather than to buy the business from Caldwell's shareholders. But, if you are publicly traded like Caldwell Partners, then you have a problem.

9 comments:

  1. Great commentary.

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  2. So wait? A search firm has a problem that a search firm is calling their people? What hypocrites! Search firms destabilize their client competitors ALL THE TIME! Team lift outs? Take a successful CEO and put him at another firm. Are you kidding me? Grow up Caldwell Partners. You are a public company, not a bunch of victims. Your CEO has been shopping your firm for YEARS.

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    1. SEC Investigation pending. Hoffmann you are going to be indicted for your illegal insider trading of CTP. Don't believe me? Get your attorney to call.

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  3. Even if it was a "real" takeover, most everyone knows that DHR sucks and no one that is worth their salt will work for them. I think the only people that don't totally know they suck are DHR's current clients. Sad for them.

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    1. The thing about DHR's current clients is that after a while they become DHR's former clients, once they work out for themselves that DHR are a poor excuse of a search firm.

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    2. Good point. That's true of DHR's current employees too. How long will the handful of ex CTP people last at DHR? Not long.

      That's the great thing about DHR's play on CTP - they took out a competitor and they are striving to do the same thing with Caldwell.

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  4. Shopping it around for a good synergistic fit is one thing, but getting bamboozled by DHR is quite another.

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  5. ^^Geoff? Geoff Hoffman? You sound angry. Is it because CTPs clients refuse to deal with your pathetic company?

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  6. I love it: "ISIL of the executive search world"! Works on so many levels.

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