The other day I was trying to remember what happened to a company in the benefits administration space I used to deal with quite regularly. Of course, as been happening with increasing regularity, it had been acquired some years ago by another provider and has been all but lost except in the memories of those of us in the business who either worked with or for them.
The list of these long gone companies is extensive and made me think for a moment about doing a “where are they now” series. After noodling on it for a while, I realized a more interesting tactic would be to take a look at today’s companies and see how they got to where they are today.
So as part of a recurring series, I bring you “How Did They Get Here,” a look at the mergers and acquisitions that have formed the companies we see today. Along the way, you will hear names such as Kwasha-Lipton, Howard Johnson, Wellspring Resources and Williams Thatcher Rand.
By no means will I provide the definitive history of the organizations I will look at, but it might be kind of fun. There are enough of you out there who have a history with the companies that we will look at that I hope you will contribute to the conversation with recollections of the old companies’ cultures and services or even add to the list companies that I may have missed.
For the first “How Did They Get Here” company, I take a look at Hewitt Associates. I do this not because we have written a lot about them lately, but because as a company who grew mostly organically, I thought they would be the easiest for a first company. Many of the other current service providers will take a bit more time and research to write about.
For the longest time, Hewitt Associates was the company that kept their heads down and did nothing but grow organically. They made a reputation for themselves as being the best at what they do with no excuses. Growth came easy as they became the gold standard in benefits consulting and administration.
Hewitt was founded in 1940 as an actuarial and benefits consulting firm (ABC firm), and expanded from there into broader compensation and HR consulting and administration. I don’t know if it can still be looked at in this way (perhaps others have an opinion), but at one time Hewitt was part of what many termed the Big 4 ABC firms: Hewitt, Wyatt, Mercer, Towers Perrin. Is there still a “Big 4,” or has the move to broader HR services and the proliferation of administration-only firms rendered this an obsolete notion?
In any case, Hewitt was not known for making acquisitions, but rather steady organic growth and a strong non-diluted corporate culture. All this seemingly changed in June of 2002, when Hewitt became a publicly traded company. Before this, Hewitt’s forays into new lines of business was through expansion of service, not acquisition. Remember Sageo? This was a separately run internet health and welfare services business created by Hewitt in 2000 to capitalize on the tech bubble. In September of 2001, it was wrapped back into Hewitt, its clients transitioned to the TBA platform, its employees redeployed or terminated. (Anyone reading this today who worked for Sageo? I’d love to hear recollections.)
After going public in 2002, the acquisitions seemed to come as an annual event. In June, 2002, Hewitt acquired the UK Actuarial firm, Bacon and Woodrow. Also in 2002, Hewitt acquired National City’s Retirement Plan Services recordkeeping staff, systems and clients. The client base was about 500 clients with 130,000 participants. It wasn’t a major acquisition for Hewitt, but it was a portend of a much more significant acquisition one year later: Northern Trust Retirement Services.
Northern Trust was, by most accounts, a significant player in 401(k) recordkeeping and pension services. In fact, Northern was one of the first (if I recall, they used to market that they were THE first) to use voice response systems to collect 401(k) participant transactional requests.
Also in 2003, Hewitt began its foray into broader HR and payroll services through the acquisition of Cyborg. At the time, Hewitt’s press release billed it this way:
"Hewitt becomes the only organization able to offer total HR outsourcing services - HR, benefits and payroll - with complete HR consulting expertise to large (more than 10,000 employees) companies.”“
Of course, we end this story of Hewitt acquisition with the most recent and in retrospect, most notorious of all: the Exult acquisition. Exult has been the most difficult of all to digest and with it, Hewitt has ceased the annual acquisition ritual it began in 2002.
Only time will tell if Hewitt will renew is acquisitive path, or whether they in fact will become the acquired as has been speculated for many years.
About the author – Donald Glade is President and Founder of Sourcing Analytics, Inc., an independent consulting firm specializing in helping companies optimize their HR / benefits / payroll service partnerships through relationship management, financial analysis, and process improvement.