Employee Engagement: 2018 Should be Industry’s First Billion Dollar Year

Posted in M&A, Human Capital Management By John Mathis

Employee Engagement: 2018 Should be Industry’s First Billion Dollar Year

The employee engagement market is becoming more diverse and integrated into common HR practices. The end customers are employers of all sizes looking to measure their employee’s wellbeing, promote efficiency and drive business outcomes. Technology innovations in the space allow for more insightful analytics, improved employee connectivity and integration with a company’s existing HRIS.

This segment may attract more than $1.0 billion in capital and M&A transactions this year, although more than half of the market value of transactions was dominated by Morneau Shepell’s (TSX:MSI) acquisition of LifeWorks USA, a financial wellness and employee recognition platform.

Through the first six months of 2018, five trends continue:  1) Employer’s focus on a healthier workforce; 2) The integration of engagement into existing learning and compliance content; 3) ROI of an employee engagement solution is becoming more apparent through improved analytics; 4) Burgeoning solutions for keeping employees connected and informed; 5) Demand for more tailored rewards and recognition.

1. Health and Wellbeing

Trend Insight

  • Preventative treatments and analysis to keep workers healthier and at work
  • Platforms to recommend coverage and reward employees for healthy habits

Notable Transactions

  • Virgin Pulse and RedBrick Health acquired by Marlin Equity Partners in May 2018 to create the largest digital health and engagement company with Redbrick Health valued at $156M
  • Connexions Asia raised $25M in VC funding in February 2017 to scale their workplace wellness platform

2. Engagement and learning crossovers

Trend Insight

  • Provide employees with tools to become more financially adept through online videos
  • Encourage effective learning through gamified content and simulations

Notable Transactions

  • Neyber, an employee lending platform raised $152M in a PE deal in September 2017 led by Goldman Sachs Alternative Investments
  • GamEffective, a gamification based learning platform, raised $11M in VC funding in April 2018

3. Data-driven insights on investments in employee culture

Trend Insight

  • Analytics of real-time feedback and pulse surveys
  • Data driven insights on ROI of engagement solutions

Notable Transactions

  • Culture Amp, a people analytics platform, raised $40M in VC funding in July 2018
  • Peakon, a feedback analytics platform, raised $22M in VC funding in February 2018

4. Connected Workforce

Trend Insight

  • Corporations streamlining mobile company updates, news and surveys to employees
  • Internal connectivity and communication

Notable Transactions

  • Dynamic Signal raised $46M in VC funding in August 2018 to expand their employee communication platform
  • Staffbase raised $10M in VC funding in June 2018 to further development of their employee interaction platform

5. Better Rewards

Trend Insight

  • Employee recognition and social platforms
  • 77% of employees feel that new rewards in the workplace are important or very important
  • Travel and business expense awareness

Notable Transactions

  • Perkbox, a rewards and recognition platform, raised $14M in VC funding in November 2017
  • Rocketrip, a budget management and rewards platform, raised $15 in VC funding in March 2018

DISCLAIMER This presentation is intended for information and discussion purposes only and does not constitute legal or professional investment advice. Statements of fact and opinions expressed are those of the participants individually and, unless expressly stated to the contrary, are not the opinion or position of Harbor View Advisors, LLC (“HVA”). The information in this presentation was compiled from sources believed to be reliable for informational purposes only. HVA does not endorse or approve, and assumes no responsibility for, the content, accuracy or completeness of the information presented.