"Our primary purpose is to expand and... take advantage of our
global growth opportunities..."
"...an IPO is particularly important because it will give the firm
needed incentives to bring in new recruits."
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Heidrick Holders Vote to Offer Stake in Firm to Public
The Wall Street Journal, February 1998
By Rebecca Quick
Heidrick & Struggles, Inc., the nation's
second-largest executive search firm, has approved plans to go
public.
The privately held Chicago firm said it will
announce today that its shareholders voted to offer a minority stake
through an initial public offering. The voting took place Saturday in a
meeting outside Washington, using keypads provided by Meridia of
Plymouth Meeting, PA.
In September, the firm's executive committee
approved the exploration of an initial public offering. The IPO, if
completed, would make Heidrick & Struggles only the second executive
search firm to go public. Another major recruiter, Lamalie Associates,
Inc., raised about $25 million with its IPO in July.
Heidrick & Struggles said it would use proceeds
from an offering for strategic acquisitions, investing in its technology
and communications infrastructure, and compensating existing employees
and recruiting new ones. "Our primary purpose is to expand and ... take
advantage of our global growth opportunities," said Patrick Pittard, the
firm's president and chief executive officer.
Industry watchers, however, say an IPO is
particularly important because it will give the firm needed incentives
to bring in new recruits. "Stock options are really what attract young
employees these days, compared with the old track," said Tom
Rodenhauser, an independent analyst in recruiting and consulting
issues.
We...believe we can create the appropriate
long-term incentives for our people while preserving the firm's
partnership culture and client-service orientation," Mr. Pittard
added.
But at least one analyst questioned the effect
an offering would have on the firm. "I still don't think this is the
best thing for search firms to be doing," said Scott Scanlon, chairman
and chief executive officer for Hunt-Scanlon Advisors Corp., a
Greenwich, Conn., consulting firm that tracks the executive search
industry. "The quarter-to-quarter pressure will be on them, and that
can tend to make you take your eye off the ball." Mr. Scanlon said he
worried the firm would be forced to focus more on quantity than
quality.
Heidrick & Struggles now has 170 shareholders.
Of those, well-known CEO-hunter Gerard Roche is the largest, with just
over 8,000 shares, or a 3% stake in the firm. The veteran recruiter's
stake is currently valued at about $2 million.
The firm is expected to file a registration
statement for the offering with the Securities and Exchange Commission
in the next six months to one year. Heidrick & Struggles is targeting a
20% interest in the firm for the IPO. Lehman Brothers and Goldman Sachs
have been selected as underwriters for the offering, according to a
source close to the matter.
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