Human Capital Management
Q2 HCM SUMMARY & OUTLOOK
During the second quarter of 2022, HCM venture funding and M&A dropped from 2021 record levels but remained above previous years as there is still significant capital to deploy. Strong headwinds such as recession fears, rising interest rates and inflation are impacting early-stage pre-money valuations which have dropped significantly from the 2021 highs In M&A, valuations in all HCM sectors have also dropped relative to last year but deal volumes remain healthy. In Q2, there were 53 M&A transactions within HR Tech along with 40 transactions within Staffing.
Staffing: A Focus on Temporary and IT
$200M
$150M
$100M
$50M
$0M
Robust M&A activity within staffing highlights the continued demand for talent, especially in the IT and Temporary staffing sectors. Futuris acquired IT staffing provider Savantis Solutions completing the company’s third acquisition this year to strengthen its IT staffing solution. Another large player within IT staffing, Volt Information Sciences, was acquired in a public to private transaction by Vega Consulting, a subsidiary of American CyberSystems for a 99% premium to the company’s stock price Temporary staffing dominated activity this quarter with 10 acquisitions recorded in the space Notably, freelance hiring and management solution WorkGenius acquired temporary staffing provider JBC for $136M Similarly, global recruitment provider Randstad acquired temporary staffing platform Side to increase the company’s digital presence and capabilities.
Core HR: Decreasing Time to Onboard
Streamlining onboarding functions is a top priority for employers as they aim to ramp employees quickly and reduce the administrative burden on HR. The workforce management space was responsible for 35% of the M&A transactions within Core HR in the second quarter Competition for top talent is higher than ever and companies are leveraging software to shorten the onboarding process Streamlined onboarding specialist Velocity Global raised $400M in Series B funding from Norwest Venture Partners Moreover, digital onboarding platform Humanforce received a $44M growth investment from Accel KKR to fund future acquisitions.
Talent Acquisition: Cross Border Hiring & Payments
The increase in remote work in the wake of the pandemic has made it more feasible for employers to access a global talent pool. Given the complexity of international hiring and payments, companies are turning to outsourced solutions which have garnered significant attention from investors. Global hiring and payroll platform Remote raised $300M in Series C funding at a pre-money valuation of $2 7B, underscoring employers’ efforts to hire talent internationally Similarly, provider of global talent mobility tools Brookfield RPS, subsidiary of Relo Group, was acquired by employee relocation provider SIRVA Worldwide.
Talent Management: Apprenticeships and Skills Marketplaces
Companies continue to upskill their existing workforce and are optimizing methods of learning through apprenticeships and team-based experiences. Finding effective ways for employees to learn in the flow of work has become a top priority for employers. For example, online apprenticeship platform Multiverse raised $220M Series D funding at a $1.5B premoney valuation Additionally, professional development platform GO1 raised $100M at a $1 9B pre-money valuation On the M&A side, Learn In, an upskilling platform and learning marketplace, was acquired by Degreed, highlighting the demand for capability training
VC Pre-Money Valuations (Early Stage)
HCM PUBLIC MARKETS
COMPARATIVE MEDIAN REVENUE MULTIPLES
TTM Median Revenue Multiples
TTM Median EBITDA Multiples
3/31/2022 6/30/2022
Source: PitchBook, Data as of June 2021 TTM
3/31/2022 6/30/2022
Source: Refinitiv
Indices based on equal-weighted prices and comprised of:
HR Tech | ADP, ASUR, BNFT, CDAY, DHI, FC, HSII, HSTM, KFY, NSP, ORCL, PAYX, PAYC, PCTY, SAP, SGE, TNET, WDAY, XM
Staffing | AMN, ASGN, BBSI, BGSF, CCRN, JOB, KELYA, KFRC, MAN, MHH, RGP, RHI, STAF, TBI
Excludes companies not traded prior to 6/1/2021
HCM PUBLIC TRADING STATISTICS
HVA’S Q2 2022 HCM QUARTERLY REPORT
CORE
TALENT MANAGEMENT
TALENT ACQUISITION
HCM M&A SUMMARY
HR M&A TRANSACTIONS
TALENT MANAGEMENT
HR M&A TRANSACTIONS
TALENT MANAGEMENT (CONT.)
TALENT ACQUISITION
STAFFING M&A TRANSACTIONS
Jun-22
Jun-22 Flucrum Consulting, LLC Levi, Ray, & Shoup
Jun-22 Quintegra Resourcing
Jun-22 eTribez Casting
Jun-22 Staff Me Up
Jun-22
Jun-22 Savantis Solutions
Jun-22
Jun-22 Tekberry
Jun-22
Jun-22
HCM FINANCING TRANSACTIONS
HVA’S Q2 2022 HCM QUARTERLY REPORT
$300M APR 2022 GLOBAL RECRUITMENT
COACHING PLATFORM
$200M JUN 2022 CORPORATE TRAINING
$220M JUN
LEARNING PLATFORM
$100M JUN 2022
QUARTERLY FINANCING ACTIVITY
HR TECH UNICORN TRACKER
HVA’S Q2 2022 HCM QUARTERLY REPORT
Q2 2022 NEWLY MINTED UNICORNS
HR TECH UNICORNS
HCM VENTURE CAPITAL ACTIVITY
Jun-22
HCM VENTURE CAPITAL ACTIVITY
EARLY-STAGE VENTURE CAPITAL (CONT.)
Q2 Venture Funding Summary
The Workforce Management sector is set to outpace 2021 in terms of deal volume this year. The pandemic and the tight labor market that followed were the main catalysts for the sector’s growth and forced employers to improve the systems for managing employees. Increasing onboarding efficiencies along with increasing visibility into employee compensation are two of the main areas with the most activity In such a competitive labor market, companies must pick up efficiencies when available, like onboarding new employees quickly. In addition, compensation management tools are increasingly prevalent as employers fight for talent. In H1 2022, there were 13 M&A transactions within the workforce management space as opposed to 17 M&A deals in all of 2021.
Workforce Management M&A Deal Count
Onboarding Efficiencies:
As mentioned earlier in this report, removing obstacles to onboarding is a top priority for employers in a strong and competitive labor market. Companies are extending the focus on efficient talent acquisition through the onboarding process by acquiring solutions that streamline their efforts For example, candidate sourcing platform Worc acquired onboarding provider Hrestart Moreover, one of the largest credit bureaus in the US Equifax acquired platform for streamlined onboarding Efficient Hire On the venture side, companies within the onboarding space have raised over $460M YTD 2022. Remote team management platform that facilitates onboarding and offboarding Firstbase raised a $50M Series B led by Kleiner Perkins at a $300M pre-money valuation. Similarly, provider of HR software including payroll, benefits, and onboarding Employment Hero raised $157M in Series F funding led by Seek at a $761M pre-money valuation. Interestingly, the company also acquired workforce management and payroll platform Keypay in February 2022 Compensation Management:
Companies are leveraging compensation management software to attract and retain top talent Offering fair and attractive salaries becomes increasingly difficult when dealing with geographically dispersed teams Benchmarking tools gauge compensation by role and region and help companies stay competitive by offering compensation based on industry standards and cost of living. Developer of compensation management platform Pave raised a $100M Series C led by Index Ventures at a $1.5B pre-money valuation. Four months after the company’s raise, they acquired real-time compensation benchmarking platform AdvancedHR. Similarly, professional network for B2B sales Bravado raised $26M in Series B funding led by Tiger Global and subsequently acquired compensation data platform for sales people CompGauge Compensation management helps with employee acquisition and retention for employers but also provides employees with a clear picture of the relationship between performance and compensation In Q1 2022, employee compensation management platform Beqom raised a $300M late-stage round led by Sumeru Equity Partners.
Not so long ago, workforce management tools were seen as a commodity. The continued tight labor market has both employers and employees demanding top-of-the-line solutions to manage and retain talent. With capital infusion and consolidation, technology innovation has made way for efficiencies and entirely new offerings. The macro tailwinds suggest a continued emphasis going forward
UPCOMING EVENT
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HUMAN CAPITAL MANAGEMENT TEAM
The material in this report is for information purposes only and is not intended to be relied upon as financial, accounting, tax, legal or other professional advice. This report does not constitute and should not be construed as soliciting or offering any investment or other transaction, identifying securities for you to purchase or offer to purchase, or recommending the acquisition or disposition of any investment. Harbor View Advisors does not guarantee the accuracy or reliability of any data provided from third party resources. Although we endeavor to provide accurate information from third party sources, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future.