HCM TECHNOLOGY SECTOR REVIEW | Q2 2019...and Real Estate Industries has been acquired by Employee scheduling solutions for retail and hospitality sectors acquired Provider of time

HCM TECHNOLOGY SECTOR REVIEW | Q2 2019

T E C H N O L O G Y , M E D I A & T E L E C O M PAGE | 1

HUMAN CAPITAL MANAGEMENT TECHNOLOGY SECTOR REVIEW | Q2 2019

• 35+ professionals across Boston, San Francisco, and London

H A R R I S W I L L I A M S ( “ H W ” ) T E C H N O L O G Y , M E D I A & T E L E C O M ( “ T M T ” ) G R O U P

• 340+ professionals across eight offices globally

• 170+ closed transactions in the last 24 months

• 10 industry groupsH O R I Z O N T A L F O C U S S E C T O R S

• Compliance Software

• CRM and Member Management Software

• Data & Analytics

• Enterprise Software

• Human Capital Management

• Infrastructure & Security Software

• IT & Tech Enabled Services

• Managed Services, Hosting & Data Center Solutions

• Online Marketing, Data & Research

V E R T I C A L F O C U S S E C T O R S

• Architecture, Engineering & Construction

• eCommerce & Retail Software

• Education Technology

• Energy Technology

• Facilities & Real Estate Technology

• Financial Technology

• Government Technology

• Healthcare IT

• Industrial & Supply Chain Software

A N D Y L E E D+1 415-217-3420

T Y L E R D E W I N G+1 617-654-2133

D A N L I N S A L A T A+1 617-654-2122

S A M H E N D L E R+1 617-654-2117

P R I Y A N K A N A I T H A N I+1 617-654-2115

M I K E W I L K I N S+1 415-217-3411

T H I E R R Y M O N J A U Z E+44 20 7518 8901

J U L I E N O U S S A D O N+44 20 7518 8909

S E L E C T R E C E N T H W H C M T E C H N O L O G Y T R A N S A C T I O N S

Offers courses for healthcare professionals and healthcare organizations & provides an online business-education library

has been acquired by

Provider of Workforce Management, Training, and Compliance Solutions for the Healthcare, Financial Services, and Real Estate Industries


Employee scheduling solutions for retail and hospitality sectors


Provider of time and attendance management, staff scheduling, payroll and security management software products

has made a majority investment in

Developer of business management software for businesses and non-profit organizations in the United Kingdom

has received a majority investment

from

Developer of business management software for businesses and non-profit organizations in the United Kingdom

has acquired a majority stake in


Provider of administration software, rules-based online benefits enrollment, data integration, medical and voluntary benefits, broker and HR admin dashboards


E R I K S Z Y N D L A R+1 415-217-3418

Provider of GRC SaaS solutions including credential management and payer enrollment services to healthcare facilities

has acquired

Provider of emergency care training intended to deliver safety and health compliance to communities and businesses


Provider of fully-integrated, SaaS-based operator qualification (OQ); drug and alcohol; safety and insurance; and training solutions across multiple end-markets




Solutions focused on sourcing, recruiting, interviewing, and on-boarding employees to an

organization

• Employee recruitment, engagement, and retention remain top of mind - especially as job market tightens

• Data-driven / market place tools are increasing connectivity for both enterprises and their contingent / on-demand workers

• Talent tools adopting machine learning, predictive analytics, assessment algorithms, and artificial intelligence

• Real time employee review solutions gaining traction (social, collaboration management, rewards)

• 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

Solutions focused on optimizing the efficiency and productivity of an

organization’s employees

• “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

• HRIS automation is table-stakes as employers now shifting focus to productivity and collaboration enhancers

• Automated and comprehensive risk management / compliance tools continue to experience strong adoption

• Back office HR capabilities for on-demand labor market is an emerging market opportunity

• Leading vertical-specific platforms remain highly attractive to investors and acquirers (e.g., retail, healthcare, and hospitality)



• Hodges-Mace provides employee benefits technology, voluntary benefits, and custom enrollment services

• With the addition of Hodges-Mace's highly configurable technology and high-touch enrollment services, Alight will now be able to meet the needs of employers of nearly any size and level of complexity, including employers smaller than what Alight has traditionally served

• The acquisition of Hodges-Mace will allow Alight to expand their capabilities and further their efforts to help employers deliver impactful benefits programs, while providing their people with the resources they need to be better healthcare consumers

EV: Confidential

Rev: Confidential EV / EBITDA: Confidential

EV / Rev: Confidential

• Seattle-based PayScale provides SaaS-based compensation data, analytics, and software

• PayScale has more than 8,000 customers from small business to blue-chip companies such as Dish Network, Getty Images, Skullcandy, Time Warner, T-Mobile, Macy’s, Sunsweet, and UnitedHealth Group

• This investment will provide PayScale with a new financial partner to build upon its strong momentum and help continue to drive product innovation

EV: $325m



• Karen HR’s ‘cognitive recruiting assistant’, Karen AI, integrates with existing systems and harnesses leading-edge technology to enhance recruitment processes and boost candidate engagement

• Karen HR offers a platform that ranks hundreds of resumes against jobs every second and can be deployed to engage with jobseekers via chat or SMS

• The acquisition extends Alexander Mann Solutions’ global capabilities while further supporting the Company’s aggressive growth plans and commitment to extending its footprint in the Americas

EV: Confidential



• WageWorks provides tax-advantaged programs for employees and employers

• WageWorks’ platform specializes in member and employer engagement to provide Consumer-Directed Benefits (CDBs), including pre-tax spending accounts such as HSAs, FSAs, and commuter benefit services

• The acquisition will provide significant synergy opportunities with approximately $50 million in annualized, on-going synergies expected while the combined entity will provide broader, deeper, and more innovate solutions to the combined customer base

• Cadient provides a unified recruiting platform for salaried and hourly positions and offers solutions that handle the complexities of high-volume, hourly hiring

• Created in 2007 through the combination of two businesses, Unicru and Deploy, Cadient holds key partner relationships with multiple workforce onboarding service providers, including background checking, WOTC screening, and drug testing services

• Trive’s acquisition will support the next phase of Cadient’s growth through product investment and a dedicated focus on customer satisfaction

EV: $2.0b

Rev: $464m EV / EBITDA: 21.7x

EV / Rev: 4.3x

EV: Confidential





16

6

18

512

1710 9

14 11 14 1217

26

3830

21

3540 38

5145

41

5244

48 5044

48 51 54

69

93

111115

124

Q1 - 15 Q2 - 15 Q3 - 15 Q4 - 15 Q1 - 16 Q2 - 16 Q3 - 16 Q4 - 16 Q1 - 17 Q2 - 17 Q3 - 17 Q4 - 17 Q1 - 18 Q2 - 18 Q3 - 18 Q4 - 18 Q1 - 19 Q2- 19

HCM Deals Trailing LTM

• The key strategic acquirers have combined for 38 HCM technology related acquisitions since 2015, but IBM has not completed a HCM acquisition since 2016

• Key strategics accounted for none of the HCM Technology deals YTD 2019

• Workday and Kronos have established a consistent HCM M&A strategy, accounting for 16 transactions for the last 4 years

MOST ACTIVE STRATEGIC ACQUIRERS OF HCM TECHNOLOGY ASSETS BY VOLUME1

GLOBAL HCM TECHNOLOGY M&A ACTIVITY1

• There were 35 HCM Technology acquisitions in Q2 2019

• In line with general M&A volume, HCM technology transactions experienced an up-tick in Q2 2019

• HCM technology companies continue to attract attention from both strategic and financial acquirers

4

2

4

7

2

4 4

3

9



Diversified Platforms

ERP Focused Platforms

R E P R E S E N T A T I V E P R O V I D E R S

Focused Solutions

To receive the latest Human Capital Management Technology market

map, please contact HW at [email protected]

mailto:[email protected]



HR

SO

FT

WA

RE

EV / 2019E EBITDA

EV / 2019E Revenue

1.4x 19.3x7.0x

18.7x 69.1x36.9x

BE

NE

FIT

S T

EC

HN

OLO

GY

EV / 2019E EBITDA

EV / 2019E Revenue

2.4x 11.0x2.9x

9.7x 56.3x27.2x

DIV

ER

SIF

IED

PLA

TF

OR

MS

EV / 2019E EBITDA

EV / 2019E Revenue

5.7x 7.6x6.0x

12.7x 18.0x17.6x

60

80

100

120

140

160

Jul-18 Oct-18 Jan-19 Apr-19 Jul-19

S&P 500 HR Software

60

70

80

90

100

110

120


S&P 500 Benefits Technology

60

80

100

120

140


S&P 500 Diversified Platforms



–

PUBLIC COMPARABLES2

As of July 8, 2019 ($ in millions)

H U M A N R E S O U R C E S S O F T W A R E

D I V E R S I F I E D P L A T F O R M S

B E N E F I T S T E C H N O L O G Y

Enterprise Market % of 52 1-Year Stock 3-Year Stock Revenue Growth 2018E EBITDA Enterprise Value / Price /

Company Ticker Value Capitalization Week High Performance Performance 2018 2019P Margin LTM Rev. '19P Rev. LTM EBITDA '19P EBITDA Earnings

Automatic Data Processing, Inc. ADP-US $71,802 $71,408 96.3% 22.2% 73.7% 7.0% 6.4% 22.9% 5.1x 4.9x 21.6x 19.9x 37.6x

Workday, Inc. Class A WDAY 47,394 34,874 97.4% 67.2% 184.3% 32.0% 26.7% 17.1% 15.6x 13.5x NM 69.1x NA

Paychex, Inc. PAYX 30,721 30,487 96.0% 21.6% 38.3% 9.9% 10.6% 41.9% 8.1x 7.7x NM 18.7x 28.9x

Paycom Software, Inc. PAYC 13,884 13,987 99.1% 131.0% 425.6% 30.8% 27.1% 42.5% 22.7x 19.3x NM 46.7x 92.6x

Ceridian HCM Holding, Inc. CDAY-US 7,929 7,152 94.2% 50.0% NA 11.3% 8.7% 21.0% 10.7x 9.8x NM 43.0x NA

Paylocity Holding Corp. PCTY 5,460 5,348 97.3% 59.5% 130.5% 24.3% 21.7% 25.4% 12.3x 10.6x NM 36.9x 124.0x

Cornerstone Ondemand, Inc. CSOD 3,419 3,552 98.9% 21.5% 54.3% 11.6% 5.6% 17.5% 6.3x 6.0x NM 27.7x NA

Pluralsight, Inc. Class A PS 2,213 2,965 81.1% 20.3% NA 39.1% 36.2% NM 8.8x 7.0x NM NM NA

Upwork, Inc. UPWK-US 1,512 1,712 63.9% NA NA NA 19.2% 1.5% NA 5.0x NM NM NA

Asure Software, Inc. ASUR-US 258 154 59.8% (38.5%) 104.7% 63.4% 18.1% 22.4% 2.7x 2.5x 29.0x NM NA

DHI Group, Inc. DHX-US 210 217 88.7% 71.3% (39.7%) (26.8%) 1.1% 21.0% 1.3x 1.4x 7.8x NM 33.9x

HR Software Median $5,460 $5,348 96.0% 36.1% 89.2% 18.0% 18.1% 21.7% 8.5x 7 .0x 21.6x 36.9x 37 .6x

HealthEquity Inc HQY-US $3,715 $3,970 62.3% (19.4%) 104.6% (0.6%) 20.0% 40.9% 12.2x 11.0x 36.0x 27.2x 56.1x

WageWorks, Inc. WAGE 1,267 2,020 89.2% (4.7%) (16.6%) (1.9%) 0.9% 28.7% 2.7x 2.7x 13.2x 9.7x 108.0x

Benefitfocus, Inc. BNFT 942 823 41.7% (29.7%) (36.3%) 7.1% 17.6% 4.0% 3.6x 3.1x NM 56.3x NA

Castlight Health, Inc. Class B CSLT-US 369 328 50.6% (31.6%) (24.9%) 19.0% (0.5%) NM 2.4x 2.4x NM NM NA

Benefits Technology Median $1,104 $1,421 56.4% (24.5%) (20.7%) 3.3% 9.3% 28.7% 3.1x 2.9x 24.6x 27 .2x 82.0x

Microsoft Corporation MSFT-US $1,002,722 $1,049,500 99.0% 35.4% 161.9% 13.6% 11.9% 42.2% 8.2x 7.6x 19.4x 17.6x 29.8x

Oracle Corporation ORCL-US 241,084 198,581 99.8% 29.4% 45.7% 1.6% 0.8% 46.8% 6.1x 6.0x 14.2x 12.7x 20.6x

SAP SE SAP-DE 175,167 169,749 98.0% 18.2% 80.5% (3.0%) 9.0% 31.3% 5.9x 5.7x 21.9x 18.0x 44.2x

Diversif ied Platforms Median $241,084 $198,581 99.0% 29.4% 80.5% 1.6% 9.0% 42.2% 6.1x 6.0x 19.4x 17 .6x 29.8x



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SELECT RECENT M&A TRANSACTIONS2

Announced Date Target/Issuer Buyer Descr iption Enterpr i se Value ($m)

07/02/2019 Hodges-Mace LLC Alight, Inc. Offers employee benefits communication and enrollment services to large U.S. employers NA

06/27/2019 Karen HR, Inc. Newincco 780 Ltd. Develops a cognitive recruiting chatbot designed for recruiting services NA

06/25/2019 Waltz, Inc. WeWork Cos., Inc. Develops a smartphone payment solution platform for public transport systems NA

06/23/2019 ReachMee AB HR Manager Norge AS Offers tools for discovering, recruiting, and hiring talents serving both private and public sectors NA

06/18/2019 Jibe, Inc. iCIMS, Inc. Develops a recruiting solution which helps enterprises review job applications from smartphones, tablets or desktopsNA

06/17/2019 Cadient LLC Trive Capital LLC Develops applicant tracking and assessment products NA

06/13/2019 Haldu BV Impact NV Offers employee recruitment and talent selection services NA

06/03/2019 United Retirement Plan Consultants, Inc. Ascensus LLC Provides design, consulting, and administration services of retirement plan NA

06/03/2019 Teleopti AB Calabrio, Inc. Develops workforce management software solutions NA

05/30/2019 Syft Online Ltd. Recruit Holdings Co., Ltd. Syft Online Ltd. operates online recruitment platform and provides staff support services NA

05/21/2019 Nimble Software Systems, Inc. Paycor, Inc. Provides cloud based employee scheduling and time clocking software solutions NA

05/15/2019 HK Payroll Services, Inc. iSolved HCM LLC Provides payroll processing and management solutions NA

05/13/2019 Lighthouse.Io, Inc. TEAM Software, Inc. Provides software development, asset tracking, and location consultancy services NA

05/01/2019 360 Corporate Benefit Advisors The Hilb Group LLC Provides cost management, employee education, and compliance assistance solutions NA

05/01/2019 Engage PEO LLC Chestnut Venture Holdings LLC Provides outsourced benefits, worker's compensation, payroll, compliance, risk management services NA

05/01/2019 Credere Group LLC Eliassen Group LLC Provides consulting and talent optimization solutions NA

05/01/2019 GitPrime, Inc. Pluralsight, Inc. Develops productivity analytics software enabling engineers to optimize work patterns with data $170.0

04/30/2019 Flexible Workforce LLC Contractor Management Services LLC Provides contracting and vendor management services NA

04/25/2019 WORKFOR Switzerland AG Safeguard Global Offers human resource consulting, outsourcing, and offshoring services NA

04/25/2019 PayScale, Inc. Francisco Partners Management LP Provides online compensation and benefit information software NA

04/18/2019 Shiftgig, Inc. /NY Hospitality & National Event Staffing Bus/Headway Workforce Solutions, Inc. Offers hospitality and event staffing solutions NA

04/17/2019 Breezy HR, Inc. Learning Technologies Group Plc Develops recruiting software $30.0

04/09/2019 Reliance Staffing & Recruiting PeopleShare LLC Provides employment staffing and recruiting services NA

04/02/2019 Agile Product Solutions, Inc. PrismHR, Inc. Offers talent management software solutions NA



06/27/19 Series C $35 $153 AllianceBernsteinDeveloper of a learning platform designed to help track and measure

all learning

06/24/19 PE GrowthConfident

ial$42 Evergreen Coast Capital

Provider of workforce management services for mid-size and large

employers

06/05/19 Series B $45 $64 Bain Capital Ventures Developer of an end-to-end AI recruiting platform

05/29/19 Series D $50 $105 Insight Partners Provides end-to-end recruiting platform to find, engage, and hire talent

05/29/19 Series C $28 $47 FTV Capital Provides online training courses for business and employees

05/26/19 Series B $18 $28 Spark Capital Developer of an online job marketplace

05/21/19 Series C $60 $100 ICONIQ Capital Developer of a revenue intelligence platform

05/20/19 Series A $18 $56 Balderton Capital Developer of a wage management platform

05/17/19 PE Growth $56 $64 Sumeru Equity PartnersProvides of pre-employment tests, including aptitude, personality, and

skills tests

04/22/19 Series A $9 $11 e.ventures Develops an online personalized career and job insights platform

04/12/19 Series D $27 $53 Blue Cloud VenturesProvides a staffing and hiring platform for the franchise and retail-

automotive industries

Note: Financial information presented above represents reported capital raised only.



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HCM TECHNOLOGY SECTOR REVIEW | Q2 2019...and Real Estate Industries has been acquired by Employee scheduling solutions for retail and hospitality sectors acquired Provider of time