CareerBuilder likely to grow as result of sale to Apollo Global, Ontario Teachers’ Pension Plan Board​ – Consumer News

on Jun19

19 June 2017 | 6:00 pm

The sale of a majority stake in CareerBuilder to a private-equity firm is likely to mean more growth for the Chicago-based company, though not necessarily at its headquarters.

New York private-equity firm Apollo Global Management said in a statement today that it’s teaming up with the Ontario Teachers’ Pension Plan Board to buy a majority stake in CareerBuilder, an online employment service, with the transaction expected to close in the third quarter.

The purchase price wasn’t released, but payments to minority investors suggest CareerBuilder sold for between $600 million and $650 million—a far cry from the $1 billion cited in speculation earlier this year that Chicago private equity firm GTCR was a possible buyer.

While the new majority owners didn’t say exactly how they plan to develop CareerBuilder, private-equity firms typically jump-start expansion by injecting more capital and gobbling up other businesses in the same industry or complementary areas.

CareerBuilder got its start in the mid 1990s as an online classified advertising site formed by a group of newspapers, including the Chicago Tribune, that wanted to have a digital presence and preserve advertising revenue tied to job listings. It was one of the first websites tailored to help job seekers and employers find each other online, and to provide advertising alongside that function.

CareerBuilder has about 3,300 employees worldwide, including 1,230 in Chicago, and had annual revenue of $714 million last year.

The online human resources arena has expanded significantly over the past 20 years, creating significant competition for CareerBuilder, including from Indeed.com, Monster.com and HotJobs.com. LinkedIn also has evolved into an important tool for employers and job seekers.

In recent years, CareerBuilder, under the leadership of CEO Matt Ferguson, parlayed its employment niche into providing software services, but building that new direction has been a slow process, said Jim Goss, an analyst with Barrington Research in Chicago. He suggested the company might benefit from taking this latest evolution out of the publicly traded sphere, and letting the company transition in private.

“The growth path for CareerBuilder might be somewhat different, and maybe perfectly suited, to private equity because it’s in a transitional” phase, Goss said.

While private equity often pursues additional acquisitions to roll up fragmented industries, such purchasing sprees are often also accompanied by cost-cutting to streamline operations and eliminate duplication. That allows private-equity investors to gain efficiencies as they scale, with an end goal of selling the business within two to six years at a profit.

Tribune Media, which took the CareerBuilder ownership stake when it split form its newspaper operations in 2014, said in a regulatory filing that it sold most of its 32 percent stake for $157 million in cash in the deal. It will retain an 8 percent position.



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