I haven’t always been positive on Glassdoor. I feel like their review system is problematic and that they aren’t really part of the employer branding ecosystem they desire to be. They may be a great job board with an interesting value proposition but that was it.
After their last round of funding in 2016, I predicted that they would be acquired or go for an IPO within 18 months. Glassdoor talked openly about preparing for the seemingly inevitable IPO.
I was off by a few months but that IPO will very likely never happen. Barring regulatory approval, Glassdoor will become part of Japan-based Recruit Holdings. The same company that owns Austin-based Indeed will add Glassdoor to its expanding portfolio of companies.
No Doom, No Gloom
I’m bullish on this deal for Glassdoor. I never felt like an IPO was inevitable because, as any observer knows, IPOs are particularly painful and risky. The level of regulatory and financial scrutiny is probably a little uncomfortable to a company that is as notoriously private as Glassdoor has been. A failed or withdrawn IPO is monumentally bad and there’s no way to control the story.
On the other hand, an acquisition is a deal that’s limited to a few players and a small army of lawyers. If an acquisition falls through, most will go unnoticed if they get out at all.
Rather than answering to shareholders who demand quarterly YOY growth, Glassdoor will be answering to Recruit Holdings. While growth is expected, they will be looking for long-term growth rather than the myopic, Wall Street version of short-term results.
Look to Indeed
One need to look no further than Indeed to see what Recruit Holding’s hands off approach can do. Indeed’s annual revenue is now eclipsing their acquisition price in 2012 (somewhere around a billion dollars). They’ve become one of the dominant brands in talent acquisition under their wing and they’ve vanquished the once powerhouses.
None of that matters after the acquisition closes.
I expect Glassdoor to be around for a long time but I could see their business model shift. Maybe they lead more with the job board component. Maybe they make some technology acquisitions that gets them beyond reputation management.
These decisions will come deliberately, even if they involve some short-term growth challenges. That’s the beauty of answering to a conglomerate and not (direct) shareholders.
The Price is Right
The price of $1.2 billion (all cash) is probably right on the money, which is why this deal got done so quietly. It’s a good value for Recruit Holdings (Glassdoor was valued at around $860M-$1B after their last round of funding in 2016). Glassdoor investors likely get their piece and get a unicorn exit in their portfolios.
Was there a better time to do this for Glassdoor? Maybe. I don’t think they could’ve got this deal done in 2016 and their round of funding was clearly to buy time. Only Glassdoor knows if they could’ve done better but my guess is they couldn’t do it better by much.
What’s more exciting is getting more insight into the business and its workings. Recruit Holdings is a public company and the wealth of information on Indeed and its growth has been helpful in assessing the market. Seeing where Glassdoor fits in will be another useful piece of information for market observers and will ultimately tell us if Recruit Holdings made the right bet here.