HW Human Capital Management (“HCM”) Introduction
Harris Williams (“HW”)
- 25+ years and more than 1,000 closed transactions
- 350+ professionals across eight offices globally
- 170+ closed transactions in the last 24 months
- 10 industry groups
Focused Advisory Services
- Mergers and acquisitions (M&A)
- Capital raises
- Corporate divestitures
Consistent Recognition for Quality
HW Technology Group
- 35+ dedicated Technology professionals
- Technology offices include Boston, San Francisco, and London
Key Technology Themes
- SaaS / Cloud
- Data & Analytics
- Digital Transformation
- A.I. / Machine Learning
Horizontal Focus Sectors
- Application Software
- Cloud Managed Services and Hosting Solutions
- Compliance Solutions
- CRM and Marketing Automation
- Human Capital Management
- Infrastructure and Security Software
- IT and Tech-Enabled Services
- Marketing, Research, and Insights Software
Vertical Focus Sectors
- Architecture, Engineering, and Construction Software
- Education Technology and Services
- Energy Technology
- Facilities and Real Estate Software
- Financial Technology and Payments
- Government Technology
- Healthcare IT
- Industrial and Supply Chain Technology
- Internet and eCommerce
- Retail Technology
Recent HW Technology Transaction: ConnectYourCare
HW’s Technology Group advised ConnectYourCare on its acquisition by a Fortune 25 Company.
Company Overview
ConnectYourCare (“CYC”) is a comprehensive SaaS platform for consumer-directed healthcare (“CDH”) and benefit account administration, savings, payments, and claims substantiation. CYC’s intuitive software, payment capabilities, and integrated banking solutions enable flexible benefit coverage with lower costs and improved compliance as well as higher consumer participation, education, and satisfaction.
The platform provides employers, brokers, and partners with a comprehensive benefit administration software suite that seamlessly incorporates payments and banking capabilities, enabling employees to make more informed benefit decisions and efficiently manage their benefits. CYC’s purpose-built software tools cater to the unique needs of human resources professionals, brokers, and partners, and deliver a compelling value proposition that has resulted in a diversified customer base of 2,200+ employers across industries and market segments. The Company’s recently launched, digital-native custodial banking platform and Non-Bank-Trustee (“NBT”) designation have driven meaningful growth from a new and highly profitable revenue stream that complements its recurring software subscription and re-occurring payment interchange revenue.
Relevant Sub-Sectors
- Consumer-Directed Healthcare
- Integrated Software & Payments
- Banking Technology
- HCM & Benefits Administration
HCM Technology Focus Areas
Talent Acquisition
Solutions focused on sourcing, recruiting, and interviewing employees
Select Representative Companies
- Employee recruitment, engagement, and retention remain top of mind – especially as the job market tightens
- Data-driven/marketplace tools are increasing connectivity for both enterprises and their contingent/on-demand workers
- Talent tools are adopting machine learning, predictive analytics, assessment algorithms, and artificial intelligence
Talent Management
Solutions focused on retaining high-quality employees, developing their skills, and rewarding performance
Select Representative Companies
- Real-time employee review solutions continue to gain traction (social, collaboration management, rewards)
- Learning management systems and corporate learning, training, and compliance content are increasingly core to the HR suite
- Companies are looking at technology for ways to retain and grow talent within their organizations
- Organizations are using data-driven tools to analyze performance and satisfaction to retain strong performers
Workforce Management
Solutions focused on optimizing the efficiency and productivity of an organization’s employees
Select Representative Companies
- “Workforce as a Strategy” is increasingly driving companies to adopt data-driven technologies that remove friction from the employee journey
- 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
- Back-office HR capabilities for on-demand labor market are an emerging market opportunity
HCM Software Market Overview
Talent Acquisition
2021 U.S. Market Size1: $1.6B+
Talent Management
2021 U.S. Market Size1: $2.0B+
Workplace Management
2021 U.S. Market Size1: $8.2B+
Trends We are Following
Implementation of AI:
- Steady demand for AI capability across the front-end recruitment process to filter through the high volume of candidates and output the most qualified candidates
- Primary use case is in the first stage of the recruitment process for highly transactional audience supporting the new gig economy workforce
- AI applications continue to increase in accuracy and usefulness, allowing HR managers to leverage the technology to automate and optimize more complex hiring processes
Employee Wellness, Experience and DE&I:
- Increasing focus on enhancing the employee experience known as “EXTech,” which encapsulates coaching, encouragement, learning, recognition, and other solutions
- Most of the market remains in its infancy with minimal penetration, but rapid adoption as it cultivates a more engaged, efficient workforce
- Companies are adopting DE&I strategies as a stream of new studies show it leads to a significant (20%+) increase in profitability
- Current landscape is small with many point solutions in the market
Flexible Earned Wage Access
- Prevailing trend allows employees to receive a portion of their earned income in advance of their actual payday as an added benefit
- COVID spurred a rapid adoption of flexible earned wage access, with many corporations finding positive employee impacts through implementation of technology solutions
Notable Q4 2020 Human Capital Management Technology Transactions1,2
iCIMS Acquisitions of Altru Labs (Dec. 14, 2020) and EASYRECRUE (Nov. 17, 2020)
- Altru Labs provides a mobile video platform to enhance the recruitment marketing experience
- EASYRECRUE provides video interviewing and digital assessment solutions
- iCIMS continues to reposition itself after packaging all their products into the iCIMS Talent Cloud in October
- With the acquisition of EASYRECRUE, iCIMS’ customers will be able to integrate new live on-demand video interviewing, scheduling, and customizable assessments into their Talent Cloud
- The acquisition of Altru Labs will give iCIMS’ customers an alternative way of attracting new talent through employee-generated content
OutMatch Acquisitions of Checkster (Nov. 17, 2020) and FurstPerson (Oct. 26, 2020)
- Checkster provides interview and reference insights during the pre-hire process, as well as talent and exit insights during post-hire
- FurstPerson provides digital hiring assessments including aptitude tests, job simulators, and personality tests
- Checkster’s pre- and post-hire tools will bolster Outmatch’s existing talent decision platform
- FurstPerson’s assessment tools complement OutMatch’s video interview offerings, as well as their current suite of assessment solutions
Phenom Acquisition of Endouble
- Endouble is an HR service provider that leverages a data-driven approach to candidate attraction and recruitment strategy
- Endouble operates out of Amsterdam and has over 50 clients in a variety of end markets
- The acquisition expands Phenom’s presence in the EMEA region and adds additional technical capabilities and expertise
- Phenom will retain Endouble’s sales, development, implementation, account management, and customer success employees
TimeClock Plus Acquisition of Humanity
- Humanity provides a cloud-based employee scheduling platform that enables its customers to accurately create dynamic schedules
- Humanity is used by more than 175,000 unique business locations to manage schedules, employee availabilities, shift trades, and day-off requests; the platform is dynamic and offers real-time availability and conflict checking solutions
- Humanity’s scheduling solution will bolster TimeClock Plus’ existing attendance tracking solution, giving greater functionality to their overall workforce management suite
TA Associates and HG Capital Reinvestment in Access Group
- The Access Group provides business management software to mid-market organizations with specific solutions dependent upon end-market
- The Access Group continues to see significant growth with revenues increasing 47% and EBITDA up 48%, driven by 15,000 new customers in the latest fiscal year
- TA Associates and HG Capital both reinvested substantial capital to execute organic and acquisition projects, as well as geographic expansion to continue supporting substantial growth
HCM Technology - Landscape
To receive the latest Human Capital Management Technology market map, please contact HW at *TMT_HCM@harriswilliams.com
Public HCM Technology Companies Valuation Methodologies1
Note: As of December 31, 2020
Note: Revenue multiples greater than 20x, and EBITDA multiples greater than 50x are considered Not Meaningful
HCM Technology – Trading Comparables1
Note: As of December 31, 2020
Note: Margins less than 0%, revenue multiples greater than 20x, and EBITDA multiples greater than 50x are considered Not Meaningful (“NM”).
Select Capital Raises1,3
Note: Financial information presented above represents reported capital raised only.