Item 1.01. Entry into a Material Definitive Agreement.
On June 14, 2017, Heidrick & Struggles International, Inc. (the “Company”), Heidrick & Struggles (UK) Limited (the
“Buyer”) and the equity holders of CoCompany Limited (the “Sellers”) entered into an Earn Out Buyout Agreement (the “Buyout Agreement”) in accordance with the terms and conditions of the Share Purchase Agreement dated
October 1, 2015 by and among the Company, the Buyer, and the Sellers, as amended by a Deed of Amendment dated August 25, 2016 (the Share Purchase Agreement and the Deed of Amendment are collectively, the “Purchase Agreement”).
Pursuant to the Buyout Agreement, in accordance with the Purchase Agreement, the Company exercised its right to buy out all of the Remaining Earn Out
Amounts. The Remaining Earn Out Amounts bought out are the Year 3 and Year 4 Earn Out Periods. The price paid to buy out the Remaining Earn Out Amounts was calculated in accordance with the formula set forth in the Purchase Agreement and will result
in an aggregate Earn Out Buyout payment to the Sellers of $2.3 million. The payment is expected to be made on or before June 23, 2017. Sellers will release the Buyer and the Company from any obligation with respect to the Remaining Earn Out
Amounts.
By exercising its right to buy out the Remaining Earn Out Amounts ahead of Year 3 and Year 4, the Company will recognize savings of
approximately $1.0 million, representing the present value of the Remaining Earn Out Amounts. The Company also believes that accelerating the payment of the Remaining Earn Out Amounts will result in greater alignment of the Leadership Consulting
business unit with Heidrick & Struggles’ broader strategic vision to provide top organizations around the world with integrated solutions for all of their leadership needs.
The foregoing summary of the Buyout 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 Buyout Agreement, a copy of which is attached as Exhibit 2.1 to this report and in incorporated herein by reference.
The Buyout Agreement has been included to provide investors with information regarding its terms. The representations and warranties made in the Buyout
Agreement were made solely for the purposes of the Buyout Agreement and may be subject to important qualifications and limitations agreed to by the parties in connection with the negotiated terms of the Buyout 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 Buyout 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 Buyout
Agreement, which subsequent information may or may not be fully reflected in the Company’s 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, the Buyer, CoCompany Limited, the Buyout Agreement and the expected benefits of the transaction. These forward-looking statements are not guarantees of future performance
and they are based on management’s expectations that involve a number of risks, uncertainties and assumptions, any of which could cause actual results or events to differ materially from those expressed in or implied by the forward-looking
statements, including risks associated with the transaction, such as uncertainties regarding the ability to realize the
expected benefits of the transaction. For a detailed discussion of risk factor impacting the Company, see the Company’s Annual Report on Form 10-K for the year ended December 31, 2016
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.