Shareholder Value in M&A: Assessing the Fairness of Heidrick & Struggles' Proposed Sale

The proposed $1.3 billion all-cash acquisition of Heidrick & Struggles International, Inc. (NASDAQ: HSII) by Advent International and Corvex Private Equity has sparked a critical debate about shareholder value. At first glance, the $59.00-per-share offer-a 26% premium to the company's 90-day volume-weighted average price-appears favorable. Yet, as with many mergers and acquisitions, the true test of fairness lies in the interplay of governance, valuation, and transparency. The ongoing investigation by Halper Sadeh LLC underscores these concerns, demanding a rigorous analysis of whether the deal serves the best interests of shareholders.

Governance Concerns: Fiduciary Duties and Leadership Dynamics

The board of directors bears the primary responsibility for ensuring that mergers maximize shareholder value. In Heidrick's case, the investigation by Halper Sadeh LLC centers on whether the board breached its fiduciary duties by failing to secure optimal consideration or disclose material information, according to Heidrick's press release. Notably, the board has undergone significant changes in recent years, including the appointment of Thomas Monahan as CEO in March 2024 and Adam Warby to key committees in September 2024, according to its MarketScreener profile. While such transitions are not inherently problematic, they raise questions about potential conflicts of interest, particularly as Monahan will continue to lead the company post-transaction.

The contingent fee structure of Halper Sadeh's representation-where shareholders incur no upfront costs-further complicates the narrative. While this model aligns the firm's incentives with those of shareholders, it also highlights the board's reliance on external scrutiny to justify the deal's terms. As stated by the firm, its investigation aims to determine whether the consortium is underpaying for Heidrick or withholding critical information about the merger, as described in the press release.

Valuation Benchmarks: A Premium, But at What Cost?

To assess the fairness of the $59.00-per-share offer, one must compare it to industry valuation multiples. Heidrick's last twelve months (LTM) EBITDA stands at $99.09 million, according to StockAnalysis statistics, yielding an enterprise value (EV) of $1.3 billion and an EV/EBITDA multiple of approximately 13.1x. This multiple significantly exceeds the 8.0x median for publicly traded recruiting and staffing companies in June 2023, per the SEC filing, and the 9.3x global median for M&A transactions in 2025, according to a CLFI report. Even against the 12.8x median for U.S. private equity-led deals in 2025, the Heidrick offer carries a 4.1x premium, as noted in the press release.

Such a premium could be justified if the company's growth prospects or client base warranted a higher multiple. However, Heidrick's financial performance tells a mixed story. While Q2 2025 revenue grew 14% quarter-over-quarter to $317 million, the MarketScreener profile shows its cash reserves plummeted by 59% year-over-year to $211 million, driven by a $164 million outflow from operating activities. Additionally, the On-Demand Talent segment, which grew 44% in 2023, reported an adjusted EBITDA loss of $2.0 million in 2024, as documented in the SEC filing. These red flags suggest that the consortium may be overpaying for a company with uneven profitability.

Investor Red Flags: Liquidity, Profitability, and Strategic Fit

The acquisition's structure-private equity-backed and all-cash-introduces further risks. Private equity firms often prioritize short-term value extraction over long-term growth, a dynamic that could undermine Heidrick's strategic focus on executive search and leadership development, according to the press release. Moreover, the company's liquidity constraints, evidenced by its dwindling cash reserves, may limit its ability to negotiate better terms or explore alternative bids.

Another concern lies in the governance of the consortium itself. While Advent and Corvex have secured committed debt financing from Deutsche Bank, UBS, and Santander, the involvement of "prominent family offices" remains opaque, per the press release. Shareholders have a right to know whether these investors bring strategic value or merely financial capital. The lack of transparency in the consortium's composition could erode trust in the deal's fairness.

The Case for Due Diligence

The Halper Sadeh investigation serves as a necessary check on the transaction's legitimacy. Shareholders must scrutinize whether the board adequately evaluated the consortium's offer, explored alternatives, and disclosed all material risks. For instance, the On-Demand Talent segment's recent losses and the company's liquidity crunch should have been factored into the valuation. Additionally, the board's decision to retain Monahan and Murray post-transaction raises questions about whether the deal prioritizes continuity over shareholder returns.

From a broader perspective, this case highlights the systemic challenges in M&A valuations. As global executive search markets grow-projected to reach $94.73 billion by 2030, according to a Mordor Intelligence projection-private equity firms are increasingly willing to pay premiums for firms with niche expertise. Yet, as Heidrick's case demonstrates, such premiums must be grounded in robust financial performance and transparent governance.

Conclusion

The proposed sale of Heidrick & Struggles presents a compelling case study in the tension between strategic ambition and shareholder value. While the $59.00-per-share offer appears generous on the surface, the investigation by Halper Sadeh LLC reveals deeper fissures in the deal's fairness. Shareholders must demand clarity on governance practices, valuation justifications, and the consortium's strategic intent. Until these questions are answered, the transaction remains a cautionary tale of the perils of opaque M&A.