The current merger trend in the training industry signals good news for consumers.
Have you noticed that the old Mom and Pops of the training industry are disappearing, with sleek corporate giants popping up in their place? Mergers and acquisitions have become a trend in the training industry, as in so many others. In some cases, mergers create a perfect blend of training services, giving customers seamless one-stop shopping. In others, mergers just make companies bigger, but not necessarily better. In choosing your training products and services, it helps to understand why so many companies are merging-and what it means for training value.
Why are mergers and acquisitions happening?
The most basic cause behind the current trend in the training industry is the same one behind the trend in industry in general: the need to have a broader reach and more global influence. As we head toward a worldwide market, companies that want to maintain high profiles need to bulk up. If a company can't grow fast by itself, then the quickest option is to merge.
Another reason, says Laraine Mancuso, a trainer with the Learning Annex in New York City, is the training industry's current upswing. "We're hot. Right now, everyone's looking to improve the quality of their workforce," she says. Mancuso cites such factors as the continued growth of learning organizations, increased global competition and the welfare-to-work movement as creating needs for training. The more services a company can provide, the more customers it will get. So for many training companies, a merger of several different services under one corporate roof makes great sense.
In January, for instance, three major training players merged to create AchieveGlobal. Executives thought each of the companies had a niche that, when combined, would create a consulting powerhouse: Learning International had a specialty in sales performance, Zenger Miller's forte was leadership and organizational effectiveness and Kaset International's was customer loyalty and commitment.
The merger actually began eight years ago, when Times Mirror Co. acquired the three. The small firms needed capital to grow themselves, says Marcia Corbett, vice president of marketing for Tampa-based AchieveGlobal. "It's difficult for companies to go to a banker with something as intangible as what we do;' she says. "It's hard to get capital funding for research or development. That was the driver for all of this-so we could secure better investment for our companies."
The acquisition solved the companies' investment issues, and a few years ago, they began to combine some backroom operations to increase efficiency and lower expenses. It was at a planning meeting of the companies' top managers that the idea to merge first floated. Those who attended the meeting discussed a major change in customer demands. Customers no longer wanted to just buy products here and there. They wanted access to solutions for all their business issues, and from one place. With only a 7 percent overlap in customers, the three entities decided to knit together their products and services.
"It used to be that the trend in training was specializing in a niche area," says Corbett. "What customers are looking for now are solutions to business problems that aren't content specific, so we needed to change our business design from a content-based to solution-based company."
New York City-based Assessment Solutions Inc. (ASI) took a similar approach. As an HR consulting firm, part of ASI's business is conducting call monitoring to help companies gauge the quality of their customer-service operations. But ASI lacked any specific customer-service training expertise. Enter Effective Learning Systems, a much smaller company that specialized in just that kind of training.
It was an excellent match-as negotiations went on, the two company presidents often joked that their firms were getting married. …