Most of the recruitment industry would have heard that the legendary duo of Geoff Morgan and Andrew Banks have announced their intention to delist Talent2 and take it back into private ownership. This will occur via a share buyback funded by, what will be a 50/50 joint venture between their private investment vehicle Morgan & Banks Investments and Allegis, a big US based recruitment firm.
Prompted by the dramatic slump in the Talent2 share price after a profit warning late last year, Morgan and Banks are, yet again, poised to buy back their own business in challenging economic times. In the early 1990s they bought back the original Morgan & Banks business from Select (UK) for about 3% of what they sold it for, only a few years earlier.
Talent2 will join a long list of recruitment companies who were once publicly owned, and are now no longer listed, thanks to takeovers, private equity buyouts or liquidation. Companies such as Julia Ross, Recruitment Solutions, Management Recruiters Australia, Catalyst and peoplebank, spring to mind.
When Talent2 departs the ASX board, there will be eight recruitment companies remaining with little, if any, chance of that number increasing.
Skilled has the recruitment sector’s largest capitalisation (currently $525 million), which is tiny when you consider the ASX’s 100th largest company, Consolidated Media, has a capitalisation ($1.8 billion) more than 3 times the size of Skilled’s.
I suspect Talent2’s departure from the ASX spells the beginning of the end for recruiters as ASX listed companies. Fund managers and analysts will likely concur that if the golden duo, Morgan and Banks, can’t consistently grow sales and profit then nobody can, and it’s time to close the book on the recruitment sector as a source of future IPOs and serious investor attention.