On Monday, San Francisco-based private-equity firm Hellman & Friedman LLC bought the Malvern, Pa.-based higher-education software company from SunGard Data Systems Inc. for $1.775 billion. SunGard Higher Education was merged with Datatel, a current Hellman & Friedman portfolio company, to operate in the near term as Datatel+SGHE.
While the combined company boasts some 3,000 employees in 40 countires, a report on Philly.com indicates that layoffs are on the table. "It is fair to say that there will be some roles in the combined company that will be redundant," according to Datatel+SGHE spokeswoman Laura Kvinge. "Our goal is to minimize the number of job reductions" through attrition and transfers, as the company seems to expand "globally," Kvinge added.
Under a debt-overhang from the 2005 purchase of SunGard Data, Silver Lake Partners and other big private investment firms have been under pressure to show returns for their $11.3 billion investment, reviewing buyers for its remaining businesses, which include SunGard Availabililty (data backup and security), SunGard Financial (trading and financial systems) and a government-services unit.
Given the prior success of the two former companies, Datatel+SGHE executives will try to take advantage of economies of scale resulting in redundancies and yes, employee layoffs.
Given some of their public statements and the nature of mergers/acquisitions, I expect executives to work on rationalizing their technology portfolio while 'repositioning' the employee talent pool to better anticipate technological shifts as well as to improve Datatel+SGHE's ability to compete globally.
At least, that's the plan. As author Larry Bossidy has said, "Strategies are intelluctually simple, their execution is not." For my former colleagues at SunGard Higher Education and acquaintances at Datatel, here's hoping for a smooth transition.