Acquisitions of SuccessFactors, Taleo, Kenexa, and Rypple as well as IPOs by WageWorks and Workday top the list for exits and M&A activity in HCM tech.
Although there has been significant growth in the number of financing deals in the Human Capital Management Technology (HCM tech) space, exit activity has not fared as well. Over the past year, there have been just 22 exits in HCM tech which represents a 31% YoY drop in exit activity. For your reference, HCM tech covers all phases of an employee’s timeline within a business, such as:
- Recruiting management – How do we identify, attract, screen, and track the best talent as quickly as possible?
- Talent management – Once applicants are hired, how do we onboard, train, teach, and retain our talent?
- Human resource management (HRMS/HRIS) – How do we manage payroll, compensation, and benefits? How can we utilize self-service solutions to give employees 24/7 access to their information?
- Workforce management – How do we help our employees set and attain performance goals? How do we manage employee scheduling, time tracking, and attendance? How do we use technology to aid in workforce planning and analytics?
In Q1’12, the quarter following the $3.4 billion acquisition of SuccessFactors by SAP, activity spiked from 6 to 12, the highest volume over the past five years. That spike also included the $1.9 billion acquisition of Taleo by Oracle. But as noted above, the increase in volume did not continue and no quarter has seen more than 9 exits since Q1’12. We should note that both Taleo and SuccessFactors were public companies when they were acquired by publicly traded Oracle and publicly traded SAP, respectively.
From Q2’08 to Q1’12 there was only one IPO (Cornerstone OnDemand, NASDAQ:CSOD). Three HCM Tech companies have gone public in the last year including WageWorks (NYSE:WAGE) in May 2012 and Workday (NYSE:WDAY) 5 months later in October 2012. Most recently, Halogen Software (TSE:HGN) issued an IPO in May of 2013 and was able to raise $55 million.
On the acquisition front, Salesforce’s acquisition of Rypple, which has now rebranded as Work.com, marked the company’s first major entry into the HCM tech space. Other notable acquisitions in the space include SHL and Totaljobs.com which were acquired by Corporate Executive Board and StepStone, respectively.