Human Capital Management
Q1 2025 Report
Q1 2025 HCM Summary & Outlook
M&A Trends & Outlook:
M&A activity in the Human Capital Management (HCM) sector was down a modest 7% in Q1 2025 as compared to the 2024 quarterly average. Not bad, considering the negative backdrop of persistent macro uncertainty with tariffs and inflationary pressures, combined with a lowmomentum job market. Perhaps even more encouraging for the HCM sector, Q1 M&A deal count was sequentially up over Q4, as it has been in 5 of the past 6 years
Of the 103 transactions in Q1, Staffing had the largest share with 46, followed by Talent Management with 26 Talent Acquisition, the smallest subsector, finished the quarter with only 11 transactions – the lowest mark since Q4 2023. Companies tied to imported goods or public sector services bore the brunt of the slowdown.
VC Trends & Outlook:
Venture capital activity in Q1 2025 presented a mixed picture with a notable decline in deal volume alongside an uptick in fundraising Deal volume fell 17% from 2024 quarterly averages, landing at 76 investment transactions. In contrast, fundraising totaled over $1.4B for the quarter. This activity was a strong pick up from Q4 and was fueled by four $100M+ funding rounds compared to six in all of 2024.
STAFFING
Global staffing M&A activity selectively continued in Q1 2025 – but was still somewhat subdued amidst macroeconomic uncertainty. However, U.S. deal volume did increase quarter-over-quarter vs. Q4 2024 and year-over-year vs. Q1 2024, primarily driven by strong interest in IT staffing (particularly as AI and cybersecurity fuel demand) and healthcare staffing. Strategic buyers actively pursued acquisitions to diversify into statement-of-work (SOW) consulting and workforce solutions, execute ongoing roll-up strategies, and expand their geographic footprints – and financial sponsors showed renewed platform interest after largely going quiet at the end of last year. Although deal activity fell short of expectations, market sentiment broadly remains optimistic for the rest of 2025.
Staffing + Executive Search:
• System One, a leading provider of workforce solutions, acquired Tech USA, a provider of workforce solutions
• TrueBlue, a leading provider of commercial staffing solutions, acquired Healthcare Staffing Professionals, a healthcare staffing firm
• ASGN, a leading provider of IT staffing and solutions provider, acquired TopBloc, a tech-enabled Workday consultancy
• TalentoHC, a recruitment services firm, acquired The PeterSan Group, an executive search firm focused on the legal industry
CORE HR
In the Core HR sector, M&A activity was fueled by strategic acquisitions in workforce management aimed at expanding capabilities, alongside ongoing consolidation in the payroll space led by established players such as ADP and Deel
Workforce Management
• Skylake Equity Partners, a software focused PE firm, acquired Shiftee, a workforce scheduling platform offering services throughout South Korea, for $280 million. Skylake aims to extend to an international customer base
• ECIT, a provider of accounting, payroll, and HR services acquired SameSystem A/S, workforce management software for the retail and hospitality space Payroll:
• Deel, an international HR solutions and payroll firm, acquired Safeguard Global’s Payroll Division, deepening existing offerings in the space
• ADP, the worlds largest payroll provider, acquired PEI, a Mexico City based payroll firm to further extend its presence in the LATAM region
103 M&A DEALS
TALENT MANAGEMENT
The Talent Management sector was second only to staffing in M&A activity in Q1 2025, recording 26 transactions – an indication of continued appetite for platforms that support workforce productivity, leadership, and retention in a volatile labor market. Notably, leadership development and talent analytics platforms accounted for nearly half of all deals. This reflects growing demand among enterprises to identify and nurture high-potential talent, upskill leaders amid rapid organizational change, and make more data-driven decisions in areas like succession planning and performance optimization.
Leadership Development:
• BTS Group, a global human-centered consultancy, acquired Sounding Board, a technology-based coaching and leadership development company
• 15Five, a global provider of performance management solutions, acquired Kona, a real time coaching and leadership development tool
Talent Analytics:
• Accenture, a global professional services consultancy provided a strategic investment in Workera, an AI-powered skills intelligence platform
• Conversational AI platform Paradox acquired Eqtble, a people analytics platform that unifies and simplifies talent analytics
TALENT ACQUISITION
With just 11 deals in Q1 2025, the Talent Acquisition sector saw its lowest transaction count in seven quarters as hiring momentum slowed due to economic uncertainty. Hiring tools and RPOs made up more than half of the volume accounting for three deals each.
Hiring Tools:
• Redarbor, a digital recruitment solutions firm catering to the LATAM market, acquired Genomawork, a recruiting and selection tool for hiring managers
• Talent experience platform provider Phenom acquired EDGE, an AI tool aimed at helping HR departments simplify their talent acquisition decisions RPO (Recruitment Process Outsourcing):
• The Rec Hub, a talent acquisition partner for firms in Europe, acquired Immersive, provider of outsourced recruiting services
• Rialto Investment Partners, a UK based boutique private equity firm, acquired Rowlands, an outsourced recruiting firm serving clients in the UK
HCM Public Markets
Comparative Multiples
YoY Median Revenue Multiples
YoY Median EBITDA Multiples
Source: PitchBook, Data as of April 2025
4/1/2024 4/1/2025 Multiples have decreased as firms like Sage Group (CoreHR) and Coursera (Talent Management) have grown revenue but observed a reduction in Enterprise Value
Sub-Sector Ecosystem
4/1/2024 4/1/2025
One-Year Historical Index Performance
The S&P 500 outperformed all four HCM indexes for the sixth consecutive quarter. Core HR was the only index to remain in positive territory year over year during a turbulent first quarter impacted by shifting trade policy.
HCM Public Trading Statistics
CORE HR
Talent Management
Talent Acquisition
Staffing
Rule of 40 Analysis
- TTM EBITDA Margin
- YOY Revenue Growth %
- Rule of 40 Baseline
Of the twenty-nine companies tracked, seven met or exceeded the Rule of 40 for Q1 2025. Of those seven, five traded at or near revenue multiples exceeding the HCM trendline Those that met the Rule of 40 but traded well below the trendline were Edenred (CoreHR), who has seen its EV fall by 50% over the past 12 months, and First Advantage (Talent Acquisition) which has seen a large decrease in profitability over the same period
The Rule of 40 is a financial ratio that assesses a company's performance by adding its revenue growth rate to its EBITDA margin The rule states that a company's combined growth rate and EBITDA margin should be 40% or higher The Rule of 40 is not necessarily correlated with a stock’s performance, and several HCM companies that have had a combined revenue growth and EBITDA margin below 40 have experienced year-over-year enterprise value growth.
Rule of 40 & Revenue Multiples Comparison
HCM M&A Summary
Recent Notable Transactions
$4.1B JAN 2025
$280M MAR 2025
$70M JAN 2025
MERGER MAR 2025
UNDISCLOSED MAR 2025
UNDISCLOSED JAN 2025
UNDISCLOSED FEB 2025
UNDISCLOSED FEB & MAR 2025
UNDISCLOSED MAR 2025
• Paycor HCM is a human capital management (HCM) software provider specializing in payroll, talent management, and workforce solutions for mid-sized and large enterprises.
• The acquisition is expected to enhance Paycor’s upmarket strength with Paychex’s established presence across all customer segments to create a comprehensive HCM portfolio.
• Shiftee is a workforce management platform offering attendance tracking, payroll processing, leave management, and e-contract solutions, serving industries like retail, manufacturing, and finance.
• The acquisition by Skylake Equity Partners will enable Shiftee to scale globally, refine its technology, and expand into new markets.
• Humi is a Canadian employment platform offering integrated HR, payroll, and benefits solutions tailored for small and medium-sized businesses.
• The acquisition by Employment Hero combines Humi’s deep understanding of the Canadian market with Employment Hero’s global Employment Operating System to provide Canadian SMEs with a localized solution for managing employment.
• Aquiline, a private investment firm specializing in financial services and technology completed a strategic merger between two of its portfolio companies: CoAdvantage (PEO) and PrimePay (HCM Platform).
• While the two businesses will continue operating independently for now, the merger creates a unified platform that combines PrimePay’s payroll and HR software with CoAdvantage’s outsourced PEO services to support businesses across the full HR lifecycle.
• Sounding Board provides scalable leadership coaching solutions, leveraging technology to deliver personalized development for executives and teams.
• The acquisition by BTS of Sounding Board aims to expand its capabilities in scalable, tech-enabled leadership development and coaching, enhancing its ability to provide end-to-end talent solutions.
• Harvest Partners, a middle market private equity firm focused on business and technology services sectors, invested in Alumni Staffing, a locum tenens staffing firm.
• This investment will enable Alumni to deepen its focus on talent development and technology, build out its specialty expertise, and expand its geographic footprint.
• eTeam, a global IT and engineering staffing and workforce solutions provider, acquired Sirius Solutions, a Houston-based SOW solutions provider.
• This acquisition expands eTeam’s service offerings by adding Sirius Solutions’ expertise in financial advisory, regulatory compliance, and operational performance.
• ZRG, a portfolio company of RFE, acquired Aspen Leadership Group, a provider of executive search services for the education industry, and EP Dine, a provider of executive search services for the legal industry.
• This acquisition is part of a continued roll-up strategy for RFE and marks the 24th and 25th acquisition since RFE’s investment in ZRG.
• AllStaff, a national staffing and workforce solutions provider specializing in light industrial, administrative, and professional placements, acquired Staff Right, an Ohio-based industrial staffing firm focused on skilled trades and manufacturing positions.
• This acquisitions expands AllStaff’s geographic footprint in Ohio and strengthens their capabilities in industrial staffing.
HR M&A Transactions
TALENT ACQUISITION
HR M&A Transactions
TALENT MANAGEMENT
Deal Date Company Name
Jan 2025 Spring International People Results
Jan 2025 Rhabit Analytics Humareso n/m n/m n/m n/m n/m
Jan 2025 DANTRIM Aciso Fitness & Health
Jan 2025 Sparrow Connected ThoughtExchange
Jan 2025 Firme VisionÈre Groupe Alphard n/m n/m
Jan 2025 Nivelat Talana
Jan 2025 Tap My Back CultureBoost n/m
Jan 2025 Komeet Vendredi n/m
Jan 2025 CCI Consulting Keystone Partners
Jan 2025 Talent At Work HR Path
Jan 2025 Workera Accenture n/m n/m
Jan 2025 Kona 15Five
Jan 2025 LeaderSharp Group Incito Executive and Leadership Development
Jan 2025 Wenabi Komeet n/m
Feb
Feb
Mar
Mar
Mar
HR M&A Transactions
Staffing
Jan-25 Adjacency Executive Search Grays Search (Merger)
Jan-25 Alumni Staffing Harvest Partners
Jan-25
Jan-25 Hornet Staffing GEE Group
Jan-25
Jan-25 MF Uitzendburo + Abiant Uitzendgroep
HCM Financing Summary
Notable Financings
Workforce Management
$200M JAN 2025
RECEIVED INVESTMENT FROM
RECEIVED INVESTMENT FROM Sourcing
$115M FEB 2025
HRIS
$140M MAR 2025
RECEIVED INVESTMENT FROM
Hiring Tools
$100M FEB 2025
RECEIVED INVESTMENT FROM
Growing Average Deal Sizes
In a reversal of the trend from late 2021 to early 2024, average deal size is rising slightly even as deal volume declines
Annual Financing Activity
HCM Financing Activity
Q3 2024 Financing Activity by Sub-Sector
VC Deals Over $100M
HR Tech Unicorn Tracker
Newly Minted Unicorns
Netradyne: January at a valuation of $1.35B
Mercor: February at a valuation of $2B
HRTech Unicorns
HCM Financing Activity
EARLY-STAGE VENTURE CAPITAL
Jan
Jan
PRIVATE EQUITY GROWTH / EXPANSION
HCM Financing Activity
LATER-STAGE VENTURE CAPITAL
Feb
About Harbor View Advisors
Operating at the intersection of investment banking and management consulting, we partner with inspiring companies and private equity firms to help them design and execute their strategies for growth or exit. With decades of successful client outcomes, we help growing teams improve their opportunities for success. We provide Sell-side advisory, Buy-side advisory and Strategic Consulting to innovative companies and financial sponsors.
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