February 2019 M&A DIGEST - claritycp.comclaritycp.com/wp-content/uploads/2019/02/February-2019-MA-Digest.pdfFeb 02, 2019  · M&A DIGEST FEBRUARY 2019 JEGI | CLARITY HCM EXPERIENCE

February 2019

M&ADIGEST

HUMAN CAPITAL MANAGEMENT OVERVIEW IN THIS ISSUE

1 Human Capital Management Overview

2 JEGI | CLARITY HCM Experience

3 Hey Did You See?

4 News & Events

5 About JEGI | CLARITY

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In this month’s M&A Digest we examine the market opportunity and the drivers behind the high levels of transaction activity across the international HCM market.

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HIGH VALUATIONS AND RECORD LEVELS OF DEAL ACTIVITY OVER LAST 12 MONTHS

$193bnTOTAL ADDRESSABLE MARKET FOR HCM

GROWING AT 9% CAGR

STRATEGIC DEALS FINANCIAL DEALS

$4.8bnINVESTED BY PE & VC IN 2018

CONTINUING INTO 2019 WITH ULTIMATE SOFTWARE’S $11BN SALE TO PRIVATE EQUITY

+110 DealsCOMPLETED IN 2018

INCLUDING RECRUIT’S $1.2BN PURCHASE OF GLASSDOOR AND MICROSOFT’S $400M ACQUISITION OF GLINT

Source: Pitchbook Data, HR tech deals 2018. TAM Source: The Starr Conspiracy Intelligence Unit

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M&A Digest February 2019 | 1

M&A DIGEST FEBRUARY 2019

WAR FOR TALENT

PEOPLE AS RESOURCES/EXPENSES

ACCELERATION OF HCM SAAS

NEED FOR PREDICTIVE INSIGHTS

People can be a company’s biggest competitive advantage, but also the largest cost. Enterprises are focused on driving long term efficiencies from their workforce.

A combination of historically low unemployment, rise of the gig economy and a millennial workforce is driving the need to attract, engage and retain talent.

HR was one of the earliest consumers of SaaS-like models with Payroll and other SaaS HCM increasingly mainstream.

VALUATIONS OUTPERFORMING BROADER MARKET

70%

90%

110%

130%

150%

170%

190%

Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 Jul-17 Jan-18 Jul-18 Jan-19

JEGI HCM Index S&P 500 Russell 2000 IndexIndexed Stock Performance

WHAT IS DRIVING VALUATIONS AND M&A?

Pent-up demand in HR to harness data to generate predictive insights to help pro-actively drive business decision making, in line with other areas of enterprise.

SKILLS GAPIncreasing need to train employees and provide the L&D platforms, tools, and analytics to deliver and measure.

Strong tailwinds and high levels of M&A activity means the Human Capital Management software and services sector continues to outperform the broader market.

70%

90%

110%

130%

150%

170%

190%

Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 Jul-17 Jan-18 Jul-18 Jan-19

JEGI HCM Index S&P 500 Russell 2000 IndexJEGI | CLARITY HCM Index

ENTERPRISE AUTOMATIONEnterprises have spent the last couple of decades installing ERP, SCM and other systems, driving increased back office automation.

M&A Digest February 2019 | 2

M&A DIGEST FEBRUARY 2019

BRIGHT FUTURE FOR HCM M&A

GLOBAL OPPORTUNITY

Macro tailwinds will continue to propel the HCM market worldwide driving underlying sector growth.

2013-Present

SaaS HCM EmergesFocused on HR power users

Basic process automation

Venture capital flows into HCM

THE EVOLUTION OF HCM IN SUMMARY

2010-20132005-20102000-2005

Leaders EmergeLeaders emerge in key areas of HCM such as:Recruiting, Learning, Performance management

Business such as:

Taleo, Kenexa, Cornerstone, Success Factors, and Sumtotal

Consolidation CrazeConsolidation arrived in two phases.

1. Broadening product suites:

Kenexa/OutstartTaleo/Learn.comSuccessFactors/Plateau

2. Large players step into the market:

IBM/KenexaOracle/TaleoSAP/SuccessFactors

Next-Gen HCMExpanded to users throughout enterprise

Data and Analytics to drive enterprise decision making

PE and Growth Equity dominate transactions

GROWTH OF PRIVATE EQUITY CAPITAL

Increasing deployment of private equity capital into sector, in particular into Europe.

HIGH VALUATION MULTIPLES

Sector valuation multiples will continue to outperform non HCM peers, with software and tech-enabled services carrying SaaS multiples.

ONE OF THE FEW HORIZONTAL SOFTWARE MARKETS REMAINING

A fragmented global market with multiple opportunities for consolidation, through broadening product suites and new market entrants.

AI & ANALYTICS

Roll out of next-gen data, analytic, and AI platforms to drive forward looking decision making.

The above was taken from a presentation delivered by Jeff Becker, US Co-Head of Technology, at the JEGI | CLARITY 2019 Media and Technology conference held in New York. For the full presentation please click HERE. To discuss this report or the Human Capital Management market more broadly please do not hesitate to contact your JEGI | CLARITY representative.

INDUSTRY REPORT: 15 YEARS OF THE HCM MARKET

M&A Digest February 2019 | 3

M&A DIGEST FEBRUARY 2019

JEGI | CLARITY HCM EXPERIENCE

RECENT TRANSACTIONS

Challenger is a leading performance improvement platform, focused on sales, marketing and customer service. In-person and online training.

World 50 is an exclusive, invite-only peer-to-peer network and knowledge exchange platform serving senior executives.

CARCO is a leading provider of tech-enabled and compliance-driven HCM and risk management solutions.

WS&A is a leading tech-enabled survey and analytics platform providing insights to support corporate planning and business outcomes.

BLR is a leading provider of governance, risk and compliance information to the healthcare and HCM sectors.

Kimble Applications is a leading SaaS-based software company for professional services automation (PSA).

ThinkHR is a leading provider of trusted HR knowledge software and services.

MTM provides Learning & Development data and analytics for corporations to measure & evaluate the effectiveness of their L&D investment.

Evanta, sold for $275 million, is a leading peer-to-peer leadership platform for Fortune 1000 C-suite executives.

The JEGI | CLARITY team has successfully completed transactions spanning minority growth equity investments, growth equity recapitalisations, control/sale transactions, and complex corporate divestitures.For more information on these deals click on the tombstones below or visit our website HERE.

ZRG Partners is a leading global executive search firm.

“The JEGI | CLARITY trans-Atlantic team were outstanding from start to finish. From identifying and engaging prospective investors to managing multiple parties on the West and East US coasts as well as in Europe and finally ultimately delivering us a fantastic deal and partner. I could not recommend them highly enough.”

“In choosing JEGI | CLARITY to represent Gartner on three very different divestitures in separate, but overlapping processes, they fulfilled our highest expectations in every way. At the core of JEGI CLARITY’s success in delivering an exceptional outcome for Gartner were their very disciplined yet pragmatic approach, their in-depth knowledge of the marketplace and buyer pools, their ability to both craft a nuanced story that resonated with buyers and present complex transaction issues clearly, and their hearty appetite for hard work and long hours. We had the full attention of JEGI | CLARITY’s deep team from start to finish, which enabled them to stay on schedule and deliver maximum value on each of the transactions. In short, the JEGI | CLARITY Team is the real deal.”

Christian KeaneGroup VP, Corporate Development, Gartner

Sean HobanChief Executive Officer, Kimble Applications

M&A Digest February 2019 | 4

M&A DIGEST FEBRUARY 2019

HEY, DID YOU SEE THIS?

SENDINBLUE ACQUIRES NEWSLETTER2GOJanuary 31, 2019

The French market leader for e-mail marketing, SendinBlue, has acquired the German medium-sized company Newsletter2Go.

LUCID GROUP ACQUIRES DIGITAL AND CREATIVE AGENCY BLUEDOGFebruary 14, 2019

Lucid Group has confirmed that it has ambitions to further broaden its capability with the support of its private equity partner LDC.

MACK BROOKS ACQUIRED BY RELX29 December, 2018

Reed Exhibitions, a division of RELX Group, has acquired Mack Brooks Exhibitions, once the deal is finalised, it will add a major line-up of industry-leading brands to Reed’s global portfolio.

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M&A Digest February 2019 | 5

M&A DIGEST FEBRUARY 2019

CLARITY PARTNER MARCUS ANSELM FEATURED IN CAMPAIGNS A LIST FOR 2019

For the second year running Marcus Anselm, Partner in London has been included in Campaign’s A List, which brings together the most powerful people in the advertising industry.

You can view the full A List HERE.

Once again we look forward to attending Mobile World Congress in Barcelona this month, the world’s largest gathering of mobile operators, device manufacturers, technology providers, vendors and content owners under one roof, including Microsoft, Niantic, Vimeo, and Huawei.

If you are at the event and would like to arrange a meeting please contact our BD Director Jonathan Goodale via email HERE.

JEGI | CLARITY LOOK FORWARD TO ATTENDING MOBILE WORLD CONGRESS 2019

NEWS & EVENTS

JEGI | CLARITY LOOK FORWARD TO ATTENDING UNLEASH 2019 IN LONDON

We look forward to attending UNLEASH in March 2019. The conference gathers thousands of decision makers, technology buyers, and disruptors and showcases innovative HR technologies and the latest business transformation insights led by global executives from some of the worlds most exciting brands and established organisations including Cornerstone, Oracle, Sage, and Google.

If you are at the event and would like to arrange a meeting please contact our BD Director Jonathan Goodale via email HERE.

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LONDON90 Long Acre London WC2E 9RA +44 20 3402 4900

SYDNEYL35, Tower One, International Towers 100 Barangaroo Avenue Sydney, NSW 2000 +61 2 8046 6840

NEW YORK 150 East 52nd Street18th FloorNew York, NY 10022 +1 212 754 0710

BOSTON One Liberty Square11th FloorBoston, MA 02109+1 617 294 6555

M&A DIGEST FEBRUARY 2019

ABOUT JEGI | CLARITY

“This is the second time we have worked with the team and put simply we would never do another deal without them by our side.”

“JEGI | CLARITY were fantastic from start to finish – smart, tenacious, incredibly hard working and thoughtful. Any transaction is potentially fraught with complexity and it was great to have them by our side to advise us. They helped us navigate the process and to deliver not just a good outcome, but the outcome we wanted.”

Piers LatimerChief Executive Officer, FC Business Intelligence

JEGI | CLARITY is a leading M&A advisory platform serving the global media, information, marketing, software and tech-enabled services sectors. With offices in London, Sydney, New York City and Boston we have a strong and growing global presence.

We provide clients with a global network of prospective buyers and senior decision makers, as well as vast industry knowledge, perspective and intelligence. This affords our clients seamless access to deep market insights and a wealth of M&A experience, enabling us to deliver them great results.

We share our clients’ passion and ambition: for what they’ve achieved, the future they’re building and the industry in which they work.

Challenger is a leading performance improvement platform, focused on sales, marketing and customer service in-person and online training.

Kimble Applications is a leading SaaS-based software company for professional services automation (PSA).

OPEN Health is a leading multi-disciplinary health communications and market access group.

FC Business Intelligence is a leading B2B events business.

MSI and Morpace are leading market research firms.

Dennis Publishing is a leading consumer media and e-commerce organisation.

FMAV is a leading audiovisual and live event production company.

MediaMonks is a leading global creative production platform.

FuseFX is a leading independent visual effects studio providing services for episodic television, feature films, commercials, and VR productions.

Turnkey Intelligence is a leading sports research and advisory firm.

MERGE is a leading integrated healthcare marketing and technology development agency.

Blue 449 (previously Walker Media) is a leading UK media agency.

SELECT RECENT TRANSACTIONS

Wesley ter Haar and Victor KnaapCo-Founders, MediaMonks

M&A Digest February 2019 | 7