Kelly’s sale of M Squared is ‘to concentrate on SA business’

KELLY Group turnaround CEO Gareth Tindall says that he needed to sell M Squared Consulting in order to cement the group’s focus on temporary and flexible staffing solutions.

Kelly on Friday announced that it would sell M Squared Consulting to US national professional services firm Solomon Edwards, for $11m.

News of the sale saw Kelly’s share price close 6.67% higher at R1.92 a share on Friday.

M Squared Consulting is the sole shareholder of Collabrus, a California-based company.

M Squared Consulting and Collabrus work in project management, business improvement, management consulting and employment payroll and compliance services.

Mr Tindall said even though M Squared Consulting had contributed strongly to Kelly’s profitability, it was not a core asset in terms of the group’s overall strategic direction.

“It’s hard enough to run a business from Cape Town, let alone San Francisco. I have come in 18 months ago to turn this group around and I recognise that we need to focus our resources on our South African businesses here in SA,” he said.

Mr Tindall was happy that Solomon Edwards, which focuses on the needs of chief financial officers, was buying M Squared Consulting.

“Its customised solutions provide the right combination of talent, expertise and experience to help clients achieve their business objectives.

“Operating from eight major US markets, it serves domestic and multinational clients,” Mr Tindall said.

Kelly has struggled over the past few years.

Kelly and other companies that deal in recruitment have been concerned about changes to SA’s labour laws, including amendments to the Basic Conditions of Employment Act and the Labour Relations Act, which limit temporary work.

Kelly is also rolling out a new time recording and payroll billing system, which has affected operational efficiency.

“Our shareholders understand I have put a turnaround strategy in place. They will need to be patient. I am a competitive person and I believe I can get this company going,” Mr Tindall said.

“I’m not sure what we will do with all of the money from M Squared yet, but we are looking to expand further in SA. We just could not work properly with M Squared in the US,” he said.

Labour analyst Loane Sharp said Kelly and other recruitment companies would struggle as long as companies were hesitant to employ people during difficult market conditions.

“I can see there may be four major players in the industry next year,” he said.

Mr Sharp works at JSE-listed Adcorp as its economist.

Hundreds of labour brokers have closed shop in the last couple of years, Mr Sharp said.