Speculation is swirling that Los Angeles-area Cornerstone OnDemand could be up for sale; the company’s stock is up about 5 percent today and rising after hours.
Scott Berg, a stock analyst at Needham, says via an email that “interest would be high for the largest leading independent provider of talent management solutions globally.”
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He says that among the potential buyers, he could envision ADP, Microsoft, and Oracle. Regarding each, he says:
- ADP: “We believe ADP could be interested in Cornerstone for several reasons. First, ADP has a long-standing relationship with CSOD as a distribution partner. However, we believe the primary interest would come from ADP’s desire to improve its talent management platform, which our industry work suggests remains woefully behind not just best-of-breed talent management vendors, but also pure-play core HRMS/payroll vendors like Ultimate Software and Workday. We believe ADP has made no less than five acquisitions in the talent management space over the last 10 years to partially build its Vantage platform. Feedback from industry checks and customers suggest this platform continues to underwhelm on functionality.”
- Microsoft: “We believe Microsoft’s interest could come from several angles, but notably to pair with its LinkedIn acquisition. We believe the strategic value of combining LinkedIn’s vast candidate/people data with Cornerstone’s talent management platform would create a highly compelling workforce management platform and could be similar to the expected combination of LinkedIn and Microsoft’s CRM platform…”
- Oracle: “Although Oracle currently has best-of-breed recruiting functionality through its acquisition of Taleo in 2012 and a solid performance management module (including succession management and compensation management), we believe the company’s venture into the Enterprise LMS segment with its early 2015 release of a new Enterprise LMS product continues to lag early sales and functionality expectations. We do see an Oracle acquisition as less likely than either ADP and Microsoft partially because Oracle could continue to go at the LMS space with its new product but also because the technology integration between CSOD’s .NET architecture would not be completely seamless given Oracle’s predominately Java based environment.”