There were four IPOs this year, including three in Australia, but there has been only one $1B+ exit in the space in recent years.

HR tech exits have remained strong over the past 3 years, with 55+ combined mergers & acquisitions and IPOs annually, up from less than 40 per year in 2012 and 2013. 2016 has already tied 2015, which saw 57 exits. The year is also already tied with 2014 for a record number of IPOs at 4. At the current run-rate, 2016 would surpass 2015’s exit activity but will fall short of 2014’s record, which saw 64 total exits.

The steady pace of exit activity is unsurprising given the trends in deals and funding in the category. On a yearly basis, deal activity in HR tech increased steadily between 2012 and 2015, and has broken 100+ deals in each of the last 3 quarters in 2016. Deal count is on pace for a record annual total this year.

Using CB Insights data, we analyzed HR tech exit activity from 2012-2016 year-to-date. We define this category broadly to include workforce management, payroll administration, and benefits administration, as well as employee development and workforce optimization. We also include tech-enabled platforms that help manage recruiting and staffing. We exclude staffing agencies, event and office space management software, and operations companies that provide office cleaning and management.

This analysis only includes first exits.

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Annual HR tech exit trends

In 2016 year-to-date, there have been 57 HR tech exits, including 53 M&A transactions and 4 IPOs. 2016 has already tied 2015’s total which saw 57 exits total, including 56 M&As and 1 IPO.

The peak year for HR tech exit activity globally was 2014, which saw 60 M&As and 4 IPOs. Consistent exit activity over the last few years is unsurprising given overall deal activity in the category. HR tech saw a surge in both deals and financing in 2014, then hit a new peak the next year, and is projected to surpass 2015’s record by 2016 year-end.

During 2014′s record year, there were 60 M&A transactions and 4 IPOs.

M&A transactions dropped to 56 in 2015 and continue to lag in 2016 with 53 reported M&A transactions thus far. IPOs have made up for the lag, with a record 4 in 2016.

The IPOs were those of LiveHire, The Search PartyTikForce, and Xref. LiveHire is an online marketplace for on-demand hires in Australia. The Search Party is another online marketplace for full-time positions in Australia and competes with LiveHire. TikForce, also in Australia, provides HR compliance and workforce management software and Xref in Canada provides background screening software.

In total, 10 HR tech startups have gone public and approximately 241 have been the targets of M&A transactions since 2012.

M&A V5

Most well-funded HR tech companies before exit

Based on disclosed funding, the most well-funded HR tech startup that has exited since 2012 is Elance.

Elance, a marketplace for freelancers, merged with HR tech startup UpWork Global in Q4’13. Prior to the merger, the company had raised approximately $94.8M in total funding. The company’s last round of funding was a $16M investment in Q1’12 from smart money investors Kleiner Perkins Caufield & Byers and New Enterprise Associates.

The second most well-funded company prior to exiting is PeopleMatter, a full-service HR management software for the services industry. The company was acquired by SnagAJob in Q2’16 and had raised approximately $60.6M in total funding.

PeopleMatter is followed closely by Bswift, a payroll and benefits software company, that was acquired by Aetna in Q2’16 after having raised $51M.

Notably, all of the companies on our most well-funded prior to ext list are headquartered in the US and 80% are VC-backed.

Most Well-Funded HR Tech Companies Before Exit 2012-2016 YTD (11/28/2016)
Rank Company Exit Investor Date Total Funding ($M)
1 Elance Merger Upwork Global Q4’13 $94.8M
2 PeopleMatter Acquired SnagAJob Q2’16 $60.6M
3 Bswift Acquired Aetna Q4’14 $51M
4 HealthcareSource Acquired Francisco Partners Q2’15 $41.2M
5 Enkata Technologies Acquired Open Span Q2’15 $39.3M
6 Simply Hired Acquired Recruit Holdings Q3’16 $38.9M
7 Evolv Acquired Cornerstone onDemand Q4’14 $38.3M
8 Bullhorn Acquired Vista Equity Partners Q2’12 $31.5M
9 PayScale Acquired Warburg Pincus Q2’14 $30.1M
10 TalentWise Merger SterlingBackCheck Q1’16 $25M

Largest HR tech exits

We used CB Insights’ Enhanced Valuation capability to identify the top HR exits since 2012. Despite this year’s strong performance in number of exits and record-tying IPOs, the last 14 months have not seen a top 10 HR tech exit.

Indeed claimed the top spot as the largest tech exit since 2010. It is the only company on the list that exited for over $1B+. Indeed was acquired by Recruit Holdings for up to $1.4B in September 2012.

Paylocity took second at a $832M valuation when it went public in March 2014; it is the only company on the list to IPO. Bswift came in third. It was acquired by Aetna in November 2014 for $400M.

Largest Valuation At Exit 2012-2016 YTD (11/28/2016)
Rank Company Exit Investor Date Valuation at Exit ($M)
1 Indeed M&A Recruit Holdings Q3’12 $1.4B
2 Paylocity IPO N/A Q1’14 $831.7M
3 Bswift M&A Aetna Q4’14 $400M
4 Totaljobs.com M&A StepStone Q2’12 $172.5M
5 Thomsons Online Benefits M&A ABRY Partners Q1’13 $158M
6 PayChoice M&A Sage Group Q3’14 $157.8M
7 Jobsite M&A StepStone Q2’14 $151.7M
8 Bright Media M&A LinkedIn Q1’14 $120M
9 PayScale M&A Warburg Pincus Q2’14 $100M
10 Bluegarden M&A Marlin Equity Partners Q3’15 $75.6M

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