Item 1.01
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Entry into a Material Definitive Agreement
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On August 12, 2016, Heidrick & Struggles, Inc., a
Delaware corporation (the Buyer), and a wholly owned subsidiary of Heidrick & Struggles International, Inc. (the Company), entered into a definitive agreement (the Purchase Agreement) to purchase the business
and substantially all of the assets of Philosophy IB, LLP, a New Jersey limited liability partnership (Philosophy IB).
Philosophy IB is
engaged in the business of leadership and organizational development and management consulting.
Under the terms of the Purchase Agreement, the Buyer will
pay Philosophy IBs equityholders $6 million at closing, subject to certain adjustments, plus additional cash consideration after closing based on fee revenue generated from the business and certain of its software products during the three
years following the completion of the transaction. The Company currently estimates that Buyer will be required to pay the sellers approximately $8 million of additional cash consideration, but the actual amount of such additional cash
consideration will depend on numerous factors that cannot be determined at this time, including the actual fee revenue generated from the business and its software products during the three years following the completion of the transaction. The
Purchase Agreement also contains representations, warranties, covenants and termination rights of the parties customary for a transaction of this type. The transaction will be financed with cash.
The consummation of the transactions contemplated by the Purchase Agreement is subject to certain specified closing conditions, including the receipt of
certain third-party consents or approvals, the absence of a material adverse effect with respect to Philosophy IBs assets and operations, the acceptance of employment offers by certain employees of Philosophy IB and other customary
closing conditions, including the accuracy of each partys representations and warranties and each partys compliance with its obligations and covenants under the Purchase Agreement. The transactions contemplated by the Purchase
Agreement have been approved by Philosophy IBs equityholders and do not require the approval of the Companys shareholders.
The foregoing
summary of the Purchase Agreement and the transactions contemplated thereby does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Purchase Agreement, a copy of which is attached as Exhibit 2.1 to
this report and is incorporated herein by reference. The representations and warranties made in the Purchase Agreement were made solely for purposes of the Purchase Agreement and may be subject to important qualifications and limitations agreed
to by the parties in connection with the negotiated terms of the Purchase Agreement. Moreover, some of those representations and warranties may have only been true at a certain date, may be subject to a contractual standard of materiality or
may have been used for purposes of allocating risk between the parties rather than establishing matters of fact. Investors are not third-party beneficiaries of the Purchase Agreement and should not rely on the representations, warranties or
covenants or any description thereof as characterizations of the actual state of facts at the time they were made or otherwise. Moreover, information concerning the subject matter of the representations and warranties may change after the date
of the Purchase Agreement, which subsequent information may or may not be fully reflected in the Companys public disclosures.
Cautions about Forward-Looking Statements
This document contains forward-looking statements, including statements regarding expectations, views, opportunities, plans, strategies, beliefs and
statements of similar effect relating to the Company, Philosophy IB, the Purchase Agreement and the expected benefits of the transaction. These forward-looking statements are not guarantees of future performance and they are based on
managements expectations that involve a number of risks, uncertainties and assumptions, any of which could cause actual results or events to differ materially from those express in or implied by the forward-looking statements, including risks
associated with the transaction, such as uncertainties regarding the closing of the transaction or the ability to realize the expected benefits of the transaction. For a detailed discussion of risk factors impacting the Company, see the
Companys Annual Report on Form 10-K for the year ended December 31, 2015 and other filings the Company makes with the Securities and Exchange Commission. The forward-looking statements contained in this document are made as of the date
hereof, and the Company assumes no obligation to revise or update any forward-looking statement, except as otherwise required by law.