The Workforce Management sector is set to outpace 2021 in terms of deal volume this year. The pandemic and the tight labor market that followed were the main catalysts for the sector’s growth and forced employers to improve the systems for managing employees. Increasing onboarding efficiencies along with increasing visibility into employee compensation are two of the main areas with the most activity. In such a competitive labor market, companies must pick up efficiencies when available, like onboarding new employees quickly. In addition, compensation management tools are increasingly prevalent as employers fight for talent. In H1 2022, there were 13 M&A transactions within the workforce management space as opposed to 17 M&A deals in all of 2021.
Onboarding Efficiencies
As mentioned earlier in this report, removing obstacles to onboarding is a top priority for employers in a strong and competitive labor market. Companies are extending the focus on efficient talent acquisition through the onboarding process by acquiring solutions that streamline their efforts. For example, candidate sourcing platform Worc acquired onboarding provider Hrestart. Moreover, one of the largest credit bureaus in the US Equifax acquired platform for streamlined onboarding Efficient Hire. On the venture side, companies within the onboarding space have raised over $460M YTD 2022. Remote team management platform that facilitates onboarding and offboarding Firstbase raised a $50M Series B led by Kleiner Perkins at a $300M pre-money valuation. Similarly, provider of HR software including payroll, benefits, and onboarding Employment Hero raised $157M in Series F funding led by Seek at a $761M pre-money valuation. Interestingly, the company also acquired workforce management and payroll platform Keypay in February 2022.
Compensation Management
Companies are leveraging compensation management software to attract and retain top talent. Offering fair and attractive salaries becomes increasingly difficult when dealing with geographically dispersed teams. Benchmarking tools gauge compensation by role and region and help companies stay competitive by offering compensation based on industry standards and cost of living. Developer of compensation management platform Pave raised a $100M Series C led by Index Ventures at a $1.5B pre-money valuation. Four months after the company’s raise, they acquired real-time compensation benchmarking platform AdvancedHR. Similarly, professional network for B2B sales Bravado raised $26M in Series B funding led by Tiger Global and subsequently acquired compensation data platform for sales people CompGauge. Compensation management helps with employee acquisition and retention for employers but also provides employees with a clear picture of the relationship between performance and compensation. In Q1 2022, employee compensation management platform Beqom raised a $300M late-stage round led by Sumeru Equity Partners.
Not so long ago, workforce management tools were seen as a commodity. The continued tight labor market has both employers and employees demanding top-of-the-line solutions to manage and retain talent. With capital infusion and consolidation, technology innovation has made way for efficiencies and entirely new offerings. The macro tailwinds suggest a continued emphasis going forward.
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.
