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March 9, 2012
 
Transaction Analysis
Cornerstone OnDemand (Nasdaq: CSOD)
to Acquire Sonar6

 

Financial Overview:

  • Transaction Value: $14M
  • Transaction Structure: Cash and Stock  

martinwolf Analysis:

  • Cornerstone OnDemand (CSOD), which provides cloud-based talent management solutions to the mid and large enterprise market, has announced it will acquire Sonar Limited (Sonar6), a provider of cloud-based talent management solutions to small businesses for $13M in cash and $1M in equity.
  • Through the acquisition, CSOD will gain access to the small business market with the addition of Sonar6's 375 clients.Cornerstone OnDemand Logo
  • In addition, CSOD will expand its leadership team by retaining top Sonar6 talent including co-founders Michael Carden, who will hold the newly-created position of VP of Small Business Operations, and Mark Hellier, who will continue as Head of Products for Small Business Operations.
  • Sonar6 will be re-branded as part of CSOD, but the two companies' products will not be integrated, highlighting the differences required by small business clients versus CSOD's core target market of mid and large enterprise clients.
  • We expect the Sonar6 offering under CSOD to compete with and win against Taleo's SMB offering as Taleo's focus will shift towards Oracle's core large enterprise customer base.
  • CSOD has a distribution partnership with ADP. This acquisition will give CSOD and ADP a SaaS-based talent management offering to take to small businesses.
  • With SAP's acquisition of SuccessFactors in December 2011, and Oracle's acquisition of Taleo in February 2012, the market has been focused on the mid to large enterprise space. Additional relevant acquisitions include:
    • Peoplefluent Inc. acquired Strategia Communications, Inc. (1/31/2012) 
    • Kenexa Corp (NYSE: KNXA) acquired OutStart, Inc. (2/6/12) 
    • Talent Technology Corporation acquired HR Integrations LLC (2/27/12) 
  • Given the size and location of the transaction, this is more of a capability and geographic expansion purchase. We expect an increased pace for similar technology/capability driven M&A for HCM solutions in the mid-market in the coming months and quarters.
  • martinwolf expects that innovation in talent management solutions for large enterprise clients will plateau. The mid-market will see technology driven acquisitions for the next two years along with significant organic growth before consolidation sets in.

Please go here to read the press release.

 

martinwolf was not the adviser in this transaction.  

 

To learn more about this transaction or our firm, contact Tim Mueller tmueller@martinwolf.com 

About martinwolf    

 

Based in Silicon Valley, martinwolf is a leading middle market M&A Advisory focused on companies with services-based business models. Since 1997, our team has completed more than 115 transactions in six countries. We are a five-year member of the Merrill Lynch PS Referral Network, and were selected as ICICI Bank's (India's leading private bank) exclusive strategic partner for acquiring U.S. IT companies. martinwolf is a member of FINRA and SIPC. For more information, visit www.martinwolf.com.

   

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