HR Tech Firm Cornerstone to Acquire SumTotal Systems from Skillsoft
HR technology firm Cornerstone OnDemand has agreed to acquire talent development software suite SumTotal Systems from Skillsoft. The deal, reported to be for $200 million, was announced on June 13 and is expected to close in the second half of 2022.
Gainesville, Fla.-based SumTotal is a learning and talent development suite that provides talent acquisition, onboarding, learning management and talent management software as a service. The company grew out of the 2003 merger of Click2learn and Docent Software and was acquired by Nashua, N.H.-based Skillsoft in 2014.
With this acquisition, Santa Monica, Calif.-based Cornerstone adds another technology tool to its growing suite of software aimed at helping organizations develop the skills of their workforce. The company recently completed the acquisition of EdCast, a learning experience platform, that was first announced in March 2022.
"Together, we will continue our mission in helping organizations and their people to develop future-proof skills, flexibly grow their careers, and achieve shared success," said Cornerstone CEO Himanshu Palsule in a press release statement.
Expanding in a Learning Market in Transition
Cornerstone has been experiencing a growth spurt since being acquired and taken private by private equity firm ClearLake Capital in October 2021. In addition to the March acquisition of EdCast, the company launched Cornerstone Xplor, its own homegrown learning experience platform, in November 2021.
The company has also been snapping up competitors in recent years. Cornerstone, which got its start in 1999 as a learning management system, rapidly expanded its customer base in 2020 when it acquired former rival and fellow LMS provider Saba Software, which had itself completed the acquisition of Halogen Software in 2017. Cornerstone also acquired microlearning content pioneer Grovo in 2018.
The SumTotal deal will add a profitable, if not growing, software product with a strong legacy in the LMS market to Cornerstone's portfolio. In fiscal 2022, SumTotal generated $123 million in bookings and $120 million in revenue, according to reported figures. Adjusted EBITDA was $37 million, excluding corporate allocations. Skillsoft, which is publicly traded, said it expects the SumTotal business to be flat in 2023.
For Skillsoft, the deal is an opportunity to focus on its core learning content business and the development of its own Percipio learning technology platform. Skillsoft has been on something of an acquisition spree itself after clearing bankruptcy in 2020 and going public in June 2021 via special-purpose acquisition company Churchill Capital Corp II. That coincided with acquisition of Global Knowledge, an IT and professionals skills development firm. Shortly thereafter Skillsoft acquired leadership development and coaching platform Pluma, Inc. for $22 million. In December 2021, Skillsoft also picked up technical skills specialist Codecademy for $525 million.
Learning Opportunities
"Through the divestiture of SumTotal, we are aligning and simplifying Skillsoft’s portfolio to serve our customers and focus our business on the best opportunities for profitable growth," said Skillsoft CEO Jeffery Tarr in a statement after the deal was announced.
Related Article: Is Content Still King in Corporate Learning?
What It Means for the Corporate Learning Market
Cornerstone appears to be bolstering its position in the LMS market by adding a profitable legacy talent platform that counts a number of large Fortune 500 companies as clients. SumTotal has experience working with companies in highly regulated industries like airlines, financial services and healthcare. But it comes at a time when the momentum in the corporate learning market has shifted from compliance-based learning management systems to more consumer-like, skills-based learning experience platforms.
“If you think about your traditional LMS, it was what the organization thought you should have and should need … whereas the LXP is much more about what the individual thinks they need and then building the pieces they need together to fit what the organization needs,” Stacia Garr, principal analyst at Red Thread Research, told Reworked in 2020.
It's a market that Cornerstone was slow to enter as companies like Degreed, LearningPool and EdCast stepped in. Cornerstone's Xplor is meant to compete in that space, and the EdCast acquisition has certainly put Cornerstone in a stronger position. But unless you're in the market for an LMS, the SumTotal acquisition is not a market mover.
"If you’re a SumTotal customer, this is probably good news since you now have a focused technology provider as your vendor," wrote industry analyst Josh Bersin. "For people looking for new learning technology, it's more or less a non-event."
Have a tip to share with our editorial team? Drop us a line:
About the Author
Mike Prokopeak is editor in chief at Reworked, the premier publication covering the r/evolution of work, where he leads content development focused on the transformation of the workplace.
Connect with Mike Prokopeak:
Featured Research
On-Demand Webinar
Read Now
Buyer's Guide
Read Now
Research Report
Read Now
Research Report
Read Now
Related Stories
Reworked CONNECT 2024 - Pre-Registration is Now Open!
