STRONG TRANSACTION EXPERIENCE IN HCM TECHNOLOGY

HW&Co. HCM Technology Transaction Experience

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HCM TECHNOLOGY TAXONOMY

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HCM TECHNOLOGY MARKET OBSERVATIONS

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  • Employee recruitment, engagement, and retention remain top of mind - especially as job market tightens
  • Talent tools adopting machine learning, predictive analytics, assessment algorithms, and artificial intelligence
  • Identification and recruitment of internal and known talent are corporate strategic initiatives
  • Learning management systems and corporate learning, training and compliance content increasingly core to HR suite
  • Employee reviews and performance management becoming a more frequent (i.e. continuous) activity
  • Data-driven / market place tools are increasing connectivity for both enterprises and their contingent / on-demand workers

In The News

 

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  • “Workforce as a Strategy” is increasingly driving companies to adopt data-driven technologies that remove friction from the employee journey
  • HRIS automation is table-stakes as employers now shifting focus to productivity and collaboration enhancers
  • Benefits and payroll solutions are fundamental to employee / employer connectivity with engagement and wellness proliferating
  • Automated and comprehensive risk management / compliance tools continue to experience strong adoption
  • Leading vertical-specific platforms remain highly attractive to investors and acquirers (e.g., retail, healthcare, and hospitality)

In The News

HCM Technology Market Observations1,2,4

 

SELECT HCM TECHNOLOGY M&A TRANSACTIONS – Q1 2018

Select HCM Technology M&A Transactions 1, 2, 4

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SAP has acquired Callidus Cloud

  • Callidus Cloud provides Configure Price Quote (CPQ) and sales performance management tools via a cloud-based platform.
  • The Company’s set of products is aimed at managing company sales teams from lead through proposal to contract to commission or payment.
  • Historically a back office management focused business, SAP’s acquisition of Callidus Cloud highlights its effort to move further into front office-related solutions.

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Exponent Private Equity has acquired CEB Talent Assessment

  • CEB Talent Assessment, formerly SHL, is a provider of talent assessment solutions, including a portfolio of assessment tools, benchmark data, predictive technologies and consultancy services.
  • The Company is a divestiture from Corporate Executive Board, which was recently acquired by Gartner, Inc. It offers products aimed to assess, select, and develop the right people for the right roles.
  • The acquisition by Exponent will help CEB Talent Assessment continue it focus on innovation, product development, and long-term growth.

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Comvest Partners has acquired Engage2Excel

  • Engaged2Excel is a leading provider of employee recognition, sales incentives, talent acquisition, and consumer loyalty solutions and services.
  • The Company helps organizations across all industries – from Fortune 100 corporations to entrepreneurial firms – target, budget, and prioritize recognition programs to drive bottom-line results.
  • Engage2Excel will partner with Comvest to drive their next phase of growth, as the Company looks to expand its employee engagement solutions.

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Paychex has acquired Lessor Group

  • Lessor Group is a SaaS and on-premise provider of payroll and HCM software solutions serving clients in the northern region of Europe.
  • With more than 40 years of industry leadership in payroll and HCM technology, Lessor Group’s portfolio includes four respected brands in Denmark, Germany, Norway, and Sweden.
  • The acquisition gives Paychex significant client and revenue growth opportunities in Europe while delivering Paychex’s market-leading HCM solutions to Lessor Group’s existing client-base.

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ADP has acquired WorkMarket

  • WorkMarket is a cloud-based workforce management solution provider that allows companies to build and manage an integrated workforce across W-2 employees, 1099 contractors, vendors, and other types of workers.
  • The Company offers solutions including tools to source and vet independent workers, manage employee engagements, and pay and evaluate workers.
  • With the acquisition, ADP builds on its current portfolio of industry-leading payroll and human capital management solutions that help clients and workers modernize the way work gets done while unlocking productivity, engagement, and growth.

SELECT RECENT HCM PRIVATE PLACEMENTS

Financing Spotlight Transaction

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Reflektive raises $60m

  • Reflektive offers a suite of performance management applications for managers and employees to easily provide real-time feedback, set goals, improve engagement, promote skills development, and maintain strategic alignment.
  • Founded in 2014, Reflektive’s latest round of funding is from new investor TPG Growth, and existing investors Andreessen Horowitz and Lightspeed Venture Partners.
  • Reflektive’s new capital will be used to invest in research and development to grow its cloud-based platform of people management solutions and expand its go-to-market strategies.

Select Recent HCM Private Placements1,2

HCM TECHNOLOGY ACQUISITION ACTIVITY

KEY STRATEGIC ACQUIRERS OF HCM TECHNOLOGY ASSETS BY VOLUME

  • The key strategic acquirers have combined for 30 HCM technology related acquisitions since 2015, but three of them (IBM, Oracle and Ultimate) have not completed a HCM acquisition since 2016
  • Key acquirers announced or completed four transactions in Q1: ADP / WorkMarket, SAP / Callidus Cloud, Paychex / Lessor, and Workday / Skipflag

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GLOBAL HCM TECHNOLOGY M&A ACTIVITY

  • Q1 2018 saw robust activity in HCM M&A with 17 transactions, the most active quarter since Q2 2016
  • Similar to years past, Q1 activity strongly outpaced the prior Q4’s activity
  • HCM technology companies remain highly attractive to both strategic and financial acquirers
  • Deal volume is robust supported by tuck in acquisitions and platform building

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HCM Technology Acquisition Activity 1,2

HCM TECHNOLOGY MARKET VALUATION

HCM Technology Market Valuation1,2

PUBLIC COMPARABLES ANALYSIS

Public Comparables Analysis1

Values less than 0.0x or greater than 30.0x are denoted NM or Not Meaningful

EBITDA Margins less than 0.0% are denoted NM or Not Meaningful

 

 

RECENT HCM SOFTWARE TRANSACTIONS

$ in millions 
Multiples less than 0.0x or greater than 30.0x are deemed NM or Not Meaningful

Recent HCM Software Transactions 1, 2, 3 

HW&CO.’S TMT GROUP: M&A ADVISOR OF CHOICE FOR MARKET LEADING TECHNOLOGY COMPANIES

1. FactSet

2. PitchBook

3. HW&Co. proprietary transaction information

4. Company Websites