I’ve worked in the HR/TA industry for over 20 years. I’ve worked with practitioners, service vendors and software vendors. I enjoy all these disparate groups. I love all my kids equally, and other lies we tell ourselves so we can sleep at night.

I quit marketing for the most part because I fell in love with HR/TA practitioners. I’ve said it many times before: I love how HR/TA practitioners have hope even when they know the darkest of the dark secrets of their company. I’m not built that way. I’m sarcastic, cynical, pessimistic, dark and, generally, don’t like people like me. That’s why I’m drawn to optimistic people.

Which brings me to why I’m writing this article. I’d like to open some dialogue about mergers and acquisitions (M&A). I’ve said before that M&A isn’t good for HR/TA practitioners, AND blending services with software is an inherent conflict of interest, even in the best of situations or with the best intentions. I’ll give you some scenarios to noodle on. Let’s start with M&A.

Firstly, M&A happens, always has and always will. That’s life in the big city. Big software companies acquire small software companies. Small software companies buy rivals, services firms buy software firms. The scenarios are endless. And, with the amount of funding poured into the HR/TA tech industry in the last few years, investors need to exit. Again, that’s life.

But, for a moment, view an acquisition from the seat of an average practitioner. We’ll use some hypothetical situations here as to not distract folks with brand names. Let’s say you’re using a payroll system, and you’ve been using it for seven years. You’re confident in your abilities with the software, you know how to make it do what you want, etc. Your favorite payroll system then gets acquired by a larger payroll company. As a software user, your life just got worse. You used to be confident. Now, you have to start over. Change is happening with or without you. One of the issues with M&A is that we normally don’t factor in how users respond to change. We implement a new system. We lightly train users and expect them to get on with life. Change is hard for everyone. Everyone!

Don’t get me wrong, in the scenario above; the acquiring software company is better; its software is newer, has more features, and has an ecosystem built around it. It’s an upgrade. It’s a total upgrade. But not to everyday users – and not initially. Their confidence has been rocked, and they need deep training to leverage all the cool new stuff. So, when you see M&A activity, congratulate both firms. Growing a software company isn’t easy, and exits are important to many people.

Simultaneous to your congratulations, please stop and think about the users of the acquired company. They don’t have a voice loud enough to reach the board or C-Suite, so it’s incumbent on the acquiring company to build a robust training and user adoption program. Close the gap for users and help them become confident with the new (and better) software.

So, M&A isn’t evil. Quite the contrary. M&A with HR/TA tech software companies just lacks an understanding of how hard change is and empathy for the users. It’s fixable. We just need to factor it into our due diligence process. What will it take (time, money, energy) to get OldCo’s users to become power users of NewCo’s fancy new system? I don’t think I’m asking that much, by the way.

Now, let’s examine what a conflict of interest looks like. Most people are familiar with Enron. If not, Google it. Enron had many problems — more than I care to talk about. But one issue they had is their consulting firm was also their accounting firm. Exhibit A: Arthur Andersen. I knew people that worked for Arthur Andersen: Good people, smart people, but they were in an impossible situation. The consulting arm of Arthur Andersen would advise Enron, and the tax arm of Arthur Andersen would have to figure out how to make it work. I’ve talked with the tax folks that worked at Arthur Andersen on the Enron account, and it was pure madness. Enron and the strategy consulting division put them in a position to try and fit a square peg into a round hole. Let’s not feel too sorry for anyone involved because everyone got rich. Enron, the strategy consultants and the tax consultants, too. No crying for any of the noted parties. But it highlights a potential conflict of interest I’d like to explore in our industry.

When you read about the acquisition of Bayard Advertising by Appcast, it looks great on paper. The industry fit of the two companies is spot on. Appcast and Bayard have been partners for years. Bringing the two firms together makes sense.

Or does it?

Bayard is a services firm. Appcast is a software company. And the client might not get the full value of the marriage between these two good companies. They might inherit a conflict of interest just waiting to happen.

I’ll simplify things. Bayard is a recruitment marketing agency that works with clients on various use cases, from employer brand to career sites, to help drive traffic to jobs. They’ve been in the industry for a long time, and I’ve never heard much negativity about them.

Appcast was founded by one of the smartest people in our industry. Again I’m simplifying. Appcast is thought of as programmatic advertising. Essentially they help practitioners with what budget to spend on a given job and where to place it (Indeed, LinkedIn, Accounting Jobs in Vermont, etc.). By all accounts, the software is top-notch, like with Bayard, and I’ve not heard many complaints about anything Appcast-related.

“So, William, what’s your problem, dude?”

Pre-acquisition, Bayard, as a partner of Appcast, could recommend the technology of Appcast, or they could recommend Joveo, PandoLogic, Recruitics – the list goes on. Essentially, they could do what was best for their clients because they were impartial, like a modern-day Switzerland. It was a beautiful thing.

Post-acquisition, my gut tells me they’ll only recommend Appcast even when Appcast isn’t the best solution for a particular client or situation. Therein lies a conflict of interest. The services firm “must” pimp out the software firm, AND the software firm “must” pimp out the services firm to maximize the deal. In some cases, that will be a good thing for clients. But what about those poor souls with a solution as useful as a screen door on a submarine? How will they ever know the truth?

Oh, the tangled webs we weave.

I have friends with all the firms mentioned, and I love them all more than a fat kid loves cake, but I wouldn’t be doing my job (as I see it) if I didn’t mention some of the negative trappings of M&A for HR/TA practitioners. Just my 50 cents. For the record, everything I’ve written is fixable, but I fear that this particular type of acquisition will scare other agencies and programmatic platforms away. For example, if you’re Joveo or PandoLogic, why would you ever recommend Bayard to a client now? Your client will eventually go to Appcast, and you’ll lose business to a competitor. The opposite is also true. If you’re Radancy (or Shaker, NAS, Hope Leigh, etc.), why would you recommend Appcast, as that client will eventually become Bayard’s client? You picking up what I’m laying down here?

The acquisition makes perfect sense, but it doesn’t make sense. In my humble opinion, both firms were better off as vendor-agnostic, so they could give their clients great advice without pressure to make an acquisition thrive.

In the scenarios above, thinking deeply about users, clients and practitioners and companies putting their interests above their own can make much of what I’ve written disappear or be diminished. But I’m a pragmatist and a capitalist. I think the interest of collecting the almighty dollar will trump empathy, common sense and truly understanding the inherent conflicts of interests that merging services and software firms create. Sometimes mixing chocolate and peanut butter isn’t a good thing.

So, buckle up and hold on tight. We’re about to witness the true test of loyalty and integrity in the face of corporate mergers. It’s a thrilling tale of conflicts of interest, where truth and honesty battle it out in the arena of client recommendations. The plot thickens, my friends. Stay tuned.

With a hint of skepticism,


P.S. As always, please let me know your thoughts privately or in the comments.

William Tincup

William is the President & Editor-at-Large of RecruitingDaily. At the intersection of HR and technology, he’s a writer, speaker, advisor, consultant, investor, storyteller & teacher. He's been writing about HR and Recruiting related issues for longer than he cares to disclose. William serves on the Board of Advisors / Board of Directors for 20+ HR technology startups. William is a graduate of the University of Alabama at Birmingham with a BA in Art History. He also earned an MA in American Indian Studies from the University of Arizona and an MBA from Case Western Reserve University.