Remote Working & Recruiting Drives Record HRTech Transaction Volumes Despite Crisis
Focus on remote recruiting, payroll automation, employee well-being and healthcare staffing as attractive targets for M&A
London, UK – 15 December 2020. The working from home revolution, initiated by the Covid-19 health crisis, has contributed to record-breaking level of deal-making in the HRTech sector, as companies battle to keep fully operational using a range of platforms and apps. Hampleton Partners’ latest analysis of global HRTech mergers & acquisitions activity shows that 136 transactions have already been completed in 2020 (year-to date), up 15 per cent on 2019’s full-year total of 119 and nearly double 2015’s tally of 72 transactions.
Hampleton’s latest analysis of HRTech M&A activity shows that remote working & recruiting has contributed to record-breaking level of deal-making in the HRTech sector.
Axel Brill, sector principal, Hampleton Partners, said: “While Covid has been a threat to many traditional companies, tech companies that help organisations keep their business fully operational are currently in high demand. This is particularly true of the HRTech sector, where workforce management is one of the most important tools to maintaining business continuity.
“The current crisis has presented companies with major challenges in deploying and motivating their teams. Despite severe travel restrictions, employers need to ensure production keeps rolling and supply chains are flowing. Remote working has now led to remote recruiting, communication, project and well-being monitoring for many more companies.”
HRTech M&A trends
Hampleton’s latest HRTech M&A report outlines key trends:
Remote recruiting - Acquirers are eyeing-up targets focused on recruitment process automation through AI-based tools such as chatbots, plus companies with video interviewing tools. For example, OutMatch, a US-based provider of workforce management SaaS owned by private equity firm Rubicon Technology Partners, acquired LaunchPad, a UK-based HR video assessment SaaS, for an undisclosed amount.
Healthcare staffing and capacity management: an increasingly important vertical - During this health emergency, efficient management of healthcare staffing is proving key for hospitals’ heavy patient loads. Nasdaq-listed HealthStream, an employee training software provider, made three key HRTech acquisitions this year: NurseGrid, the number 1-rated app which helps hundreds of thousands of nurses coordinate their work schedule and non-work activities; ShiftWizard for $32 million and the Capacity Management business of publicly-listed firm Change Healthcare.
Payroll automation - These targets focus on technology which can help HR departments avoid excess costs and payroll errors; provide autopilot and automation features to draw up monthly payslips through each tax year; and securely hold employee bank and taxation details.
For example, Providence Equity Partners completed a majority investment in Wagepoint, a provider of payroll automation software to more than 12,000 small businesses across North America.
“Health empowerment” and employee well-being - Acquirers are focused on technologies such as software and apps which provide employers with an aggregated, and often anonymised, overview of their employees’ physical and mental well-being. This includes tools to track stress, illnesses, behavioural health, sleep, heart rate and mood via apps or wearable devices. It can also include rewards-based employee health and wellness management platforms, including those which motivate employees to improve their health. For instance, in March 2020, WebMD acquired The StayWellCompany, a health empowerment company which provides employers with employee health and wellbeing programmes to motivate their workforce.
2020 milestone M&A deal as Kronos and Ultimate Software merged
Kronos is a leading provider of workforce management and Human Capital Management (HCM) cloud solutions for businesses, healthcare providers, educational institutions, and government agencies. It is used by more than 40 million people in over 100 countries every day.
Ultimate Software is a leading global provider of cloud HCM and employee experience solutions, with more than 51 million people records. Its software UltiPro delivers HR, payroll, talent, and time and labour management, as well as HR service delivery solutions.
Following the merger, the new entity, UKG, is now one of the largest cloud companies, with over 12,000 employees worldwide and approximately $3 billion in revenue, to deliver HR products and services for an increasingly diversified workforce, including gig and remote workers.
Largest HRtech deals - 2020 year to date
The future of HRTech M&A
Axel Brill continued: “Even as Covid hopefully disappears over the course of the coming year, many changes in workforce culture and new practices will be maintained, so we expect HR software to continue as one of the busiest tech M&A segments.
“We’ve also seen that private equity and PE-backed acquirers have demonstrated a long-term interest in targeting HRTech companies and we expect that to continue. Meanwhile, the major Kronos/Ultimate merger shows how HR software is embedding itself into companies of all sizes around the world – a trend which will only continue to grow.”
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Note to editors
Hampleton Partners’ M&A Market Reports are compiled using data and information from the 451 Research database, a product of S&P Global; Capital IQ, a product of S&P Global; Research & Markets; CB Insights; and PwC.
Download the full Hampleton Partners’ HRTech M&A Report here: https://www.hampletonpartners.com/reports/hrtech-report/.
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: Artificial Intelligence, Autotech, Cybersecurity, Digital Commerce, Enterprise Software, Fintech, Healthtech, HR Tech, Insurtech and IT & Business Services.
For more information visit https://www.hampletonpartners.com.
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