• Venture capital and private equity investors have poured close to $14 billion into the HRtech sector in the past 24 months
London, UK – 03 December 2019. The first half of 2019 registered the largest ever transaction in HRtech history, when private equity firm Hellman & Friedman acquired Ultimate Software Group in May for $11 billion. Hampleton Partners’ latest analysis of global HRtech mergers & acquisitions activity shows that this is indicative of overall momentum in the sector, which also registered a spike in transaction volume with 66 recorded transactions and higher revenue multiples at 3.4x in 2H 2019.
Strategic acquirers were also active, including Salesforce, which recently acquired field service management ClickSoftware for $1.4 billion.
Axel Brill, director, Hampleton Partners, said: “2019 has been a great year to sell a company in the HRtech space. Transaction volumes, multiples and valuations are the highest levels monitored for years.
“One of the main reasons for current levels is the high demand for attractive assets from private equity investors, leveraged by cheap debt. Indeed, in the past two years, venture capital and private equity investors have poured close to $14 billion into this market.”
HRtech M&A trends
Rise of behavioural analytics and AI: Traditional recruitment and applicant tracking systems are viewed by new market entrants as ‘broken’. Companies such as Pymetrics, HiredScore and HireVue are using a range of new technologies, including AI filtering and behavioural testing, to offer automated, ‘unbiased’ high-volume recruitment and assessment technology.
Rapid adoption of Employee Experience Platforms: companies are rapidly deploying EEPs such as those offered by ServiceNow, Deloitte ConnectMeTM, PeopleDoc, and PeopleSpheres to provide easy-to-use, sophisticated platforms which benefit both employers and employees. The platforms offer a wide-range of functionalities, including on-boarding new employees, training and development through to compensation.
Growth of HR analytics to measure and reward performance: growing adoption of HR analytics has seen payroll data shift to strategic importance as it provides insight into the workforce and individuals to inform more evidence-based decision-making.
Top HRtech acquirers
Axel Brill continued: “As for the M&A outlook, we see strategic acquirers continuing to target HRtech entities to expand their product scope horizontally and cover all areas of digital transformation – with particular focus on big data analytics, cloud-based platforms, payment processing, resource planning and AI recruitment technologies.
“We expect the sector’s record-breaking metrics to continue on their upward trajectory. The sector is set to remain stable and strong over the long-term, as the need to improve business insights, resource allocation and employee engagement and productivity will remain imperative to future business success.”
About Hampleton Partners
Hampleton Partners is at the forefront of international mergers and acquisitions and corporate finance advisory for companies with technology at their core. Hampleton’s experienced deal makers have built, bought and sold over 100 fast-growing tech businesses and provide hands-on expertise and unrivalled advice to tech entrepreneurs and companies which are looking to accelerate growth and maximise value.
With offices in London, Frankfurt, Stockholm and San Francisco, Hampleton offers a global perspective with sector expertise in: Automotive Technology, AI, Cybersecurity, Fintech, Healthtech, IoT, VR and AR, Digital Marketing, Enterprise Software, SaaS & Cloud and E-Commerce. Download sector reports here.