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PRIVATE AND CONFIDENTIALTECHNOLOGY FOCUS. BROAD REACH. OPTIMAL RESULTS.
Human Capital Management Overview
Peter Falvey
Man...
2
Human Capital Management Market Remains Active
 High-growth sector: Talent management continues to be a priority for ex...
3
$4.35 $4.52
$5.40
$3.15
$3.78
$5.65
$0.00
$2.00
$4.00
$6.00
$8.00
$10.00
$12.00
2011 2012 2016
Talent Management
HR Core...
4
SaaS Suite Vendors Dominate the Market
Source: Gartner, Forrester Research
FORRESTER WAVEGARTNER MAGIC QUADRANT
Although...
5
Talent Management Market Demanding Integration...
Source: Bersin & Associates
GLOBAL TALENT MANAGEMENT MARKET SHARE
With...
6
...as it is Fragmented Among Three Core Functions
TALENT ACQUISITION TALENT MANAGEMENT HR CORE ADMINISTRATION
While the ...
7
Many Point Solutions and Few Suite Providers
ScaleLargerSmaller
POINT SOLUTION PROVIDERS
MARKET CONSOLIDATORS
Talent Acq...
8
HCM Point Solutions Market Map
TALENT ACQUISITION
SOURCING RECRUITING + ONBOARDING
TALENT MANAGEMENT
PERFORMANCE + SUCCE...
9
Leading Vendors Creating Suites Through Acquisition
The emerging leaders in HCM are vendors who established a large cust...
10
Recent Strategic M&A Activity
Source: Company Press Releases, SEC Filings, Wall Street Research, CapitalIQ, PitchBook
T...
11
Recent Investment Activity
There has been an influx of investment activity in the human capital management
space in 201...
12
Recent Investment Activity (cont.)
Source: Company Press Releases, SEC Filings, Wall Street Research, CapitalIQ, PitchB...
13
Falvey Partners Overview
FOCUS SELECT TRANSACTION EXPERIENCE
December 2011
Has acquired
July 2012
Has been
acquired by
...
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Human Capital Management Market Overview

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Our thoughts on the HCM market, including trends, market maps and recent transaction activity.

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Transcript of "Human Capital Management Market Overview"

  1. 1. PRIVATE AND CONFIDENTIALTECHNOLOGY FOCUS. BROAD REACH. OPTIMAL RESULTS. Human Capital Management Overview Peter Falvey Managing Director peter.falvey@falveypartners.com P. 1.617.598.0437 Jeffrey Monk Analyst jeffrey.monk@falveypartners.com P. 1.617.598.0445 Jeffrey Cook Vice President jeffrey.cook@falveypartners.com P. 1.617.598.0439
  2. 2. 2 Human Capital Management Market Remains Active  High-growth sector: Talent management continues to be a priority for executives and is being driven by changes in how enterprises interact with human capital  HR is increasing in complexity: The emergence of social media, collaboration and mobility as enterprises continue to align with the ‘Web 2.0’ world creates more opportunity, but also more challenges, for HR professionals  Highly fragmented market: There is no clear leader in the market, with many point solutions fighting for share, encouraging players to grow through acquisition  Consolidation is starting: Much of the acquisition and investment activity has been directed towards enabling and creating talent suites, as SaaS platforms are emerging as early leaders, a trend we believe will continue in 2013 The human capital management sector has been one of the most active investment and M&A markets in recent years and we expect the trend to continue
  3. 3. 3 $4.35 $4.52 $5.40 $3.15 $3.78 $5.65 $0.00 $2.00 $4.00 $6.00 $8.00 $10.00 $12.00 2011 2012 2016 Talent Management HR Core Market Growth Expected to Continue at Impressive Rate HR core systems will continue to grow even as they mature while emerging talent management point solutions are growing 2x as fast HCM MARKET SIZE  78% of CEOs plan to make changes to talent strategy, according to PwC survey  SaaS delivery is expanding market. More than 90% of talent inquiries relate to SaaS deployments − HR can utilize more solutions for significantly less cost and risk  Social media has transformed how companies recruit talent and how they praise talent, creating an emerging market for sophisticated social tools  Mobile allows talent management to be utilized more frequently and more effectively KEY DRIVERS Source: IDC, Gartner, Forrester, PwC $B $11.1B $8.3B $7.5B 4.5% CAGR 10.6% CAGR 7.4% CAGR
  4. 4. 4 SaaS Suite Vendors Dominate the Market Source: Gartner, Forrester Research FORRESTER WAVEGARTNER MAGIC QUADRANT Although the market is saturated with many high profile point solutions, vendors offering suites with depth, flexibility and ease-of-use are viewed as market leaders  Leaders are consolidating to succeed in this extremely competitive market  Focused on SaaS suites with an offering for both performance and learning
  5. 5. 5 Talent Management Market Demanding Integration... Source: Bersin & Associates GLOBAL TALENT MANAGEMENT MARKET SHARE With few players holding a significant piece of the market and >50% of the market made up of smaller solutions, there is significant opportunity for consolidation LARGE VENDORS NOT IN TOP 7
  6. 6. 6 ...as it is Fragmented Among Three Core Functions TALENT ACQUISITION TALENT MANAGEMENT HR CORE ADMINISTRATION While the market has begun consolidating into end-to-end platforms, the bulk of activity is still happening at the lower end as companies are working to assemble the leading platform across each of the three major functions of HCM  Finding and retaining employees with the necessary skills, experience and cultural fit are key as companies begin to resume hiring in earnest  Emergence of more vertical focused solutions, especially on the sourcing side (i.e. internships, executive recruiting, sector specific jobs)  Primary functions include: − Sourcing − Recruiting − Onboarding  Ensuring that individual performance and goals are clear  Learning management systems in place to fill performance gaps  Succession planning – ensuring employees know the future opportunities available to them  eLearning providers beginning to enter this space as solutions overlap with corporate training functions  Automating the many disparate functions in the human resources department is key  Major Administrative ERP vendors (Oracle, SAP) now witnessing disruption from niche players building platforms and extending capabilities beyond basic functions  Primary functions include: − HR Compliance − Compensation management − Payroll administration − Benefits administration − Time and attendance − Tax filing
  7. 7. 7 Many Point Solutions and Few Suite Providers ScaleLargerSmaller POINT SOLUTION PROVIDERS MARKET CONSOLIDATORS Talent Acquisition HR Core Admin Candidate-facing Internal Talent Management Employee-facing
  8. 8. 8 HCM Point Solutions Market Map TALENT ACQUISITION SOURCING RECRUITING + ONBOARDING TALENT MANAGEMENT PERFORMANCE + SUCCESSION TRAINING / LEARNING MANAGEMENT HR CORE ADMINISTRATION ScaleScaleScale RECOGNITION / REWARDSPAYROLL / BENEFITS / TAX / COMPLIANCETIME + ATTENDANCE
  9. 9. 9 Leading Vendors Creating Suites Through Acquisition The emerging leaders in HCM are vendors who established a large customer base in a targeted solution and have extended that foothold into surrounding HCM solutions by building platform suites via acquisition Heritage Focus Expansion Recruiting Platform Performance Learning Payroll Recruiting
  10. 10. 10 Recent Strategic M&A Activity Source: Company Press Releases, SEC Filings, Wall Street Research, CapitalIQ, PitchBook Target Acquirer Date Solution August 2013 Online training for IT professionals May 2013 Behavioral assessment solutions December 2012 Time and attendance software for SMBs September 2012 Online job search portal September 2012 SaaS social recruiting and networking September 2012 Elearning and talent management content provider August 2012 SaaS solutions for recruiting and developing employees June 2012 Video interviewing platform April 2012 Performance and succession management software March 2012 Workforce management software March 2012 SaaS solutions for organizational change and growth February 2012 On-demand talent management software February 2012 Workforce management February 2012 Workforce training software January 2012 Electronic performance software December 2011 Cloud-based performance management = Falvey Partners acted as advisor: case study and process overview in rear of book
  11. 11. 11 Recent Investment Activity There has been an influx of investment activity in the human capital management space in 2013, as emerging companies continue to fill “white spaces” across the core segments of the market and build next-generation HCM solutions Target Date Amount / Total Raised Investors Aug 2013 $10M / $15.5M Rembrandt Venture Partners, The Mayfield Fund Aug 2013 $16M / $203.5M Foundation Capital, Azure Capital Partners, Intel Capital, Others Aug 2013 $2M / $3M IrishAngels Jul 2013 $2.1M / $2.1M Venrock, Maverick Capital, Andreessen, General Catalyst Jul 2013 $1M / $1M Andreessen, Kapor Capital, Founder Collective, Greylock Jul 2013 $7M / $11.7M Edison Ventures, Carmel Ventures Jul 2013 $5.3M / $8.2M Atlas Venture, Google Ventures, NextView Ventures Jul 2013 $1.5M / $2.3M MMC Ventures Jul 2013 $2M / $4.5M Lightbank, NEA, Foundation Capital, Funders Club Jun 2013 $20M / $20M Emergence Capital Partners, Social+Capital Jun 2013 $3.5M / $3.5M Battery Ventures, Menlo Ventures Jun 2013 $25M / $25M Undisclosed Source: Company Press Releases, SEC Filings, Wall Street Research, CapitalIQ, PitchBook
  12. 12. 12 Recent Investment Activity (cont.) Source: Company Press Releases, SEC Filings, Wall Street Research, CapitalIQ, PitchBook Target Date Amount / Total Raised Investors Jun 2013 $4M / $6.5M ARTIS Ventures, Subtraction Capital, Kapor Capital, 500 Startups Jun 2013 $3.4M / $5.1M True Ventures, Lerer Ventures, Bullpen Capital Jun 2013 $2M / $2.4M Cayuga Venture Fund, Rand Capital May 2013 $15M / $24M Summit Partners, Foundation Capital May 2013 $10M / $21M SoftBank Capital, Spark Capital, Union Square Ventures May 2013 $6.5M / $6.5M Mainsail Partners Apr 2013 $5.5M / $6.5M Capital Indigo, Enzyme Venture Capital, Great Oaks Venture Capital, Kima Ventures Apr 2013 $5M / $5M Boathouse Capital Apr 2013 $1.3M / $1.3M Andreessen, KPCB, Khosla Ventures, SV Angel, Others Mar 2013 $7M / $8.7M Grandbanks Capital, Relay Ventures Mar 2013 $19M / $47.4M Scale Venture Partners, Morgenthaler, Intersouth, Harbert Feb 2013 $3.5M / $12.5M Investment Group of Santa Barbara Feb 2013 $10.7M / $17.9M Longworth Venture Partners, Polaris, Lerer Ventures, DFJ Jan 2013 Undisclosed Frontier Capital
  13. 13. 13 Falvey Partners Overview FOCUS SELECT TRANSACTION EXPERIENCE December 2011 Has acquired July 2012 Has been acquired by September 2011 Series D Convertible Preferred Stock Led by September 2012 Has been acquired by A portfolio company of July 2011 Has been acquired by a portfolio company of April 2011 Has been acquired by July 2011 Has been acquired by February 2011 Growth equity investment from July 2011 Has been acquired by March 2011 Has divested its diagnostic solutions unit November 2010 Has received an investment from A portfolio company of October 2010 PGI Notify and Send platforms acquired by August 2010 Two divisions have been acquired by a portfolio company of April 2010 Has been acquired by August 2010 Series C Convertible Preferred Stock Led by SERVICES  Sell-side or buy-side M&A  Growth capital raising  Board and corporate advisory SECTOR  Software / SaaS  Tech-enabled business services  IT services  Internet / digital media COMPANY TYPE  $50M - $250M in enterprise value  Growing, with established scale  Profitable or near-term path to profitability Falvey Partners is a leading advisory firm serving mid-market clients across technology sectors  Founded in 2012 by Peter Falvey and key members of the Morgan Keegan / Revolution Partners team  Falvey Partners professionals have closed dozens of software transactions representing billions of dollars in transaction value
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