Kenexa Corporation: Capitalizing on the Merger of Information Technology and Human Resources

Opportunity: Human Resources leverages Information Technology

• Founded as an executive recruiter, in the late 1980’s
• Developed the “Hire, Train, Retain” service model
• Purchased several companies in targeted areas; multiplied the sales post-acquisition by crossselling to Fortune 500 customer base
• Rapid growth attracted national attention, including membership in the INC 500 and E&Y Entrepreneur of the Year
• In 1998, Co-Founder, decided to retire and sell his shares
• Kenexa’s success in several business lines; online surveys, training and recruiting; required additional investment in product development and marketing
• A Private Capital partner was chosen (in lieu of an IPO) to assist in the funding of Kenexa’s needs in a multi-level recapitalization

Private Capital Solution:

• $27 million of Equity Capital from institutional investors
• Repurchased $8 million of stock from the retiring Founder and funded expansion of new product offerings
• Refinanced a stringent asset-based bank loan
• Board of Directors expanded, existing management retained control
• Additional financing in late 2000 added a critical “cushion” of capital when the economy went into a downturn.
• Business model shifted successfully to recurring contracts, supporting outsourced hiring and retention programs
• Completion of IPO on June 29, 2005 at $12/share, rose to a high of $39/share in 2007