Annual report pursuant to Section 13 and 15(d)


12 Months Ended
Apr. 30, 2017

12. Acquisitions

The following is a summary of acquisitions the Company completed during the periods indicated (no acquisitions were completed in fiscal 2017):


     Year Ended April 30,  
     2016 (1)      2015 (2)  
     (in thousands)  

Receivables due from clients

   $ 116,509      $ 3,085  

Other current assets

     15,587        56  

Property and equipment

     29,428        202  

Intangible assets

     196,400        6,600  

Other non-current assets

     7,345        18  

Current liabilities

     125,640        2,635  

Deferred compensation and other retirement plans


Deferred tax liabilities


Other liabilities

     8,536        56  







Net assets acquired

     140,964        7,270  

Purchase price

     476,885        17,496  








   $ 335,921      $ 10,226  







Integration/acquisition costs

   $ 45,409      $ 959  







Goodwill by segment – Hay Group

   $ 335,921      $ 10,226  








(1) On December 1, 2015, the Company completed its acquisition of Legacy Hay, a global leader in people strategy and organizational performance, for $476.9 million, net of cash acquired. The purchase price consisted of $259.0 million in cash ($54 million from foreign locations), net of estimated cash acquired and 5,922,136 shares of the Company’s common stock, par value $0.01 per share (the “Consideration Shares”), representing an aggregate value of $217.9 million based on the closing price of the Company’s common stock on The New York Stock Exchange on November 30, 2015. On November 23, 2015, the Company borrowed $150 million from the Term Facility, to finance a portion of the Legacy Hay acquisition purchase price. As part of the acquisition, the Company has committed to a $40 million retention pool (of which $9.0 million was paid in fiscal 2017) for certain employees of Legacy Hay subject to certain circumstances. Of the remaining balance, 50% will be payable within 45 days after November 30, 2017 and the remaining 50% will be payable within 45 days after November 30, 2018.


   The acquisition strengthens the Company’s intellectual property, enhances our geographical presence, adds complimentary capabilities to further leverage search relationships and broadens capabilities for assessment and development. It improves our ability to support the global business community not only in attracting top talent and designing compensation and reward incentives, but also with an integrated approach to the entire leadership and people continuum. Actual results of operations of Legacy Hay are included in the Company’s consolidated financial statements from December 1, 2015, the effective date of the acquisition, and includes $186.8 million, $740.2 million and $28.5 million in fee revenue, total assets and Adjusted EBITDA, respectively, with an Adjusted EBITDA margin of 14.4%, during fiscal 2016. Legacy Hay is included in the Hay Group segment.


(2) On March 1, 2015, the Company acquired all outstanding membership interests of Pivot Leadership, a global provider of innovative, customized and scalable executive development programs, for $17.5 million, net of cash acquired, which includes $2.2 million in contingent consideration. As of April 30, 2017 and 2016, the fair value of the contingent consideration is $1.3 million and $3.0 million and is included in other liabilities in the accompanying consolidated balance sheets. The contingent consideration is based on the achievement of certain revenue targets and can be up to $6.5 million, payable in four installments in fiscal 2017 to 2020. In fiscal 2017, the Company paid $1.1 million due to meeting certain revenue targets. The acquisition allows us to integrate the Company’s talent management solution with Pivot’s executive learning capabilities. Actual results of operations of Pivot Leadership are included in the Company’s consolidated financial statements from March 1, 2015, the effective date of the acquisition, and includes $3.7 million and $20.0 million in fee revenue and total assets, respectively, during fiscal 2015. Tax deductible goodwill from the Pivot Leadership acquisition was $7.4 million as of April 30, 2017 and 2016.

The aggregate purchase price for Legacy Hay was allocated on a preliminary basis to the assets acquired and liabilities assumed on their estimated fair values at the date of acquisition. During fiscal 2017, the Company finalized the purchase price allocation by recording a decrease to goodwill of $8.2 million primarily as a result of tax returns filed for periods prior to the acquisition and an increase in other assets.

Pro forma financial information (unaudited)

Unaudited pro forma consolidated fee revenue was $1.6 billion for both fiscal 2016 and 2015, and unaudited pro forma consolidated net income was $23 million and $75 million for fiscal 2016 and 2015, respectively, as though the acquisition of Legacy Hay had occurred as of the beginning of fiscal 2015. The unaudited pro forma financial information is for illustrative purposes and is not indicative of the results of operations that would have been realized if the acquisition had been completed on the date indicated, nor is it indicative of future operating results.

The unaudited pro forma results primarily include adjustments for amortization charges for acquired intangible assets and property and equipment, compensation expense for retention awards and imputed interest expense on Term Facility and the related tax effect on the aforementioned items.