HR Software and Services Monthly September 2014 1 Salient Transactions Major Indices & Exchange Rates HR Software & Services News Interest Rates HR and Payroll Software Industry Grew 9.3% in 2009-2014 The HR and Payroll software industry has experienced robust CAGR of 9.3% between 2009 and 2014, according to IBISWorld. The industry has benefited from increased private investment in software and the need for businesses to cut costs. While higher corporate profit will enable companies to outsource more HR and payroll services in 2014, growth in the number of businesses and the level of software investment will bolster industry demand Global Healthcare Workforce Management Systems Market to Reach $1.5B by 2019 The global healthcare workforce management systems market is expected to grow at a double-digit CAGR between 2014 and 2019, and is estimated to be worth $1.5 billion by 2019. The market is mainly driven by the growing need for healthcare professionals due to the increasing aging population and resultant increase in the prevalence of diseases in North America and Europe, technological innovations, and the implementation of stringent regulations HR Software & Services Update Disclosure: KeyBanc Capital Markets is a trade name under which corporate and investment banking products and services of KeyCorp and its subsidiaries, KeyBanc Capital Markets Inc., Member NYSE/FINRA/SIPC, and KeyBank National Association (“KeyBank N.A.”), are marketed. Securities products and services are offered by KeyBanc Capital Markets Inc.and its licensed securities representatives, who may also be employees of KeyBank N.A.. Banking products and services are offered by KeyBank N.A.. This report was not issued by our research department. The information contained in this report has been obtained from sources deemed to be reliable but is not represented to be complete, and it should not be relied upon as such. This report does not purport to be a complete analysis of any security, issuer, or industry and is not an offer or a solicitation of an offer to buy or sell any securities. This report is prepared for general information purposes only and does not consider the specific investment objectives, financial situation and particular needs of any individual person or entity. *Historical data has been adjusted from previous versions to account for a change in the data source to accurately reflect the comparison of current and historical periods Skillsoft Acquires SumTotal from Vista Equity Partners • Skillsoft announced the planned acquisition of SumTotal Systems from Vista Equity Partners for an undisclosed amount • SumTotal provides learning and talent management solutions to 3,500 customers and 49 million users worldwide • Skillsoft provides technology-delivered learning solutions; the acquisition expands Skillsoft’s solution portfolio and reach WageWorks Acquires CONEXIS Benefits for $118M • WageWorks acquired CONEXIS Benefits Administrators for $118 million from Word & Brown Insurance Administrators • CONEXIS offers flexible benefits, reimbursement, and direct bill administration solutions to companies Desire2Learn Raises $85M in Series B Financing • Desire2Learn raised $85 million in its Series B round of financing from investors including New Enterprise Associates, Graham Holdings, and Aurion Capital among others • Desire2Learn provides enterprise e-learning solutions Close as of 8/29/2014 1 Month 12 Month Dow Jones Industrial Average 17,098.45 3.2% 15.4% NYSE Composite Index 11,046.33 3.0% 19.2% NASDAQ Composite Index 4,580.27 4.8% 27.6% AMEX Composite Index 2,784.08 2.9% 22.4% S&P 500 Index 2,003.37 3.8% 22.7% Russell 2000 Index 1,174.35 4.8% 16.2% Euro / USD 0.7607 1.8% 0.4% Japanese Yen / USD 103.9350 1.1% 5.9% British Pound / USD 0.6032 1.8% (6.7%) % Change As of 8/29/2014 1 Month 12 Month U.S. Prime Rate 3.250% 0.00 0.00 U.S. Treasury - 10 years 2.347% (21.10) (40.20) ICE LIBOR - USD - 3 Month 0.234% (0.55) (2.59) Federal Funds Overnight Rate 0.050% 0.00 1.00 Bps Change
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HR Software and Services Monthly September 2014
1
Salient Transactions Major Indices & Exchange Rates
HR Software & Services News Interest Rates
HR and Payroll Software Industry Grew 9.3% in 2009-2014
The HR and Payroll software industry has experienced robust
CAGR of 9.3% between 2009 and 2014, according to IBISWorld.
The industry has benefited from increased private investment in
software and the need for businesses to cut costs. While higher
corporate profit will enable companies to outsource more HR and
payroll services in 2014, growth in the number of businesses and
the level of software investment will bolster industry demand
Global Healthcare Workforce Management Systems Market to
Reach $1.5B by 2019
The global healthcare workforce management systems market is
expected to grow at a double-digit CAGR between 2014 and 2019,
and is estimated to be worth $1.5 billion by 2019. The market is
mainly driven by the growing need for healthcare professionals due
to the increasing aging population and resultant increase in the
prevalence of diseases in North America and Europe, technological
innovations, and the implementation of stringent regulations
HR Software & Services Update
Disclosure: KeyBanc Capital Markets is a trade name under which corporate and investment banking products and services of KeyCorp and its subsidiaries, KeyBanc Capital Markets Inc., Member
NYSE/FINRA/SIPC, and KeyBank National Association (“KeyBank N.A.”), are marketed. Securities products and services are offered by KeyBanc Capital Markets Inc.and its licensed securities
representatives, who may also be employees of KeyBank N.A.. Banking products and services are offered by KeyBank N.A..
This report was not issued by our research department. The information contained in this report has been obtained from sources deemed to be reliable but is not represented to be complete, and it
should not be relied upon as such. This report does not purport to be a complete analysis of any security, issuer, or industry and is not an offer or a solicitation of an offer to buy or sell any securities.
This report is prepared for general information purposes only and does not consider the specific investment objectives, financial situation and particular needs of any individual person or entity.
*Historical data has been adjusted from previous versions to account for a change in the data source to accurately reflect the comparison of current and historical periods
Skillsoft Acquires SumTotal from Vista Equity Partners
• Skillsoft announced the planned acquisition of SumTotal
Systems from Vista Equity Partners for an undisclosed amount
• SumTotal provides learning and talent management solutions to
3,500 customers and 49 million users worldwide
• Skillsoft provides technology-delivered learning solutions; the
acquisition expands Skillsoft’s solution portfolio and reach
WageWorks Acquires CONEXIS Benefits for $118M
• WageWorks acquired CONEXIS Benefits Administrators for
$118 million from Word & Brown Insurance Administrators
• CONEXIS offers flexible benefits, reimbursement, and direct bill
administration solutions to companies
Desire2Learn Raises $85M in Series B Financing
• Desire2Learn raised $85 million in its Series B round of financing
from investors including New Enterprise Associates, Graham
Relative Valuation (12 Month EV / EBITDA Valuations as of August 29, 2014)
Source: Capital IQ; Note: EV/Revenue and EV/EBITDA multiples higher than 20.0x and 50.0x respective were excluded from chart calculations HR Technology: WDAY, ULTI, CEB, CSOD, BNFT, MWW, DHX, SABA, TSX:HGN
SaaS: CRM, NOW, N, CNQR, GWRE, DWRE, FUEL, RP, CVT, MKTO, LOGM, SPSC, SQI, TNGO, IL, TXTR
Note: BNFT, CVT, FUEL, PAYC, PCTY, TNET, TXTR and WDAY began trading within the past year and are not included in 12 month calculations.
Relative Valuation (12 Month EV / Revenue Valuations as of August 29, 2014)
Index Averages 1 Month 12 Month
HR Technology 4.3x 5.5x
HR Outsourcing 3.1x 3.3x
HR Staffing & Services 0.7x 0.7x
HR Benefits and Risk Consulting 2.3x 2.3x
SaaS 5.5x 7.2x
Index Averages 1 Month 12 Month
HR Technology 10.1x 9.9x
HR Outsourcing 13.7x 14.5x
HR Staffing & Services 10.4x 12.2x
HR Benefits and Risk Consulting 12.9x 12.6x
SaaS 28.7x 29.0x
HR Software and Services Monthly September 2014
6
HR Software & Services Public Trading Statistics (As of August 29, 2014)
Source: Capital IQ; Note: EV/EBITDA multiples higher than 50.0x are excluded from aggregate calculations and are marked as ‘NM’ HR Technology: WDAY, ULTI, CEB, CSOD, BNFT, MWW, DHX, SABA, TSX:HGN
HR Software & Services Public Trading Statistics (As of August 29, 2014)
Source: Capital IQ; Note: EV/EBITDA multiples higher than 50.0x are excluded from aggregate calculations and are marked as ‘NM’ HR Benefits and Risk Consulting: MMC, WSH, AJG, LSE:JLT, TSX:MSI, AIM:JLF
SaaS: CRM, NOW, N, CNQR, GWRE, DWRE, FUEL, RP, CVT, MKTO, LOGM, SPSC, SQI, TNGO, IL, TXTR
($ in millions except stock price) EV as a multiple of LTM
Current 52 Week % of 52 Market Enterprise LTM LTM NTM Total Rev
Company Price High Week High Cap Value Revenue EBITDA % Margin Revenue EBITDA Revenue EBITDA Growth
Source: Company Filings, Press Releases, Capital IQ, Research Reports
Select Recently Announced M&A Transactions (As of August 29, 2014) ($ in millions)
Announced Date Acquirer Target Target Business Description
Enterprise
Value
EV /
Revenue
EV /
EBITDA
8/21/2014 SkillSoft Corporation SumTotal Systems, LLC Provides integrated human resources solutions to customers w orldw ide NA NA NA
8/20/2014 Singapore Press Holdings Limited MindChamps Holdings Pte. Limited Provides mind development programs 43.7 NA NA
8/18/2014 The Caldw ell Partners International Inc. Haw ksmoor Search LimitedProvides board and senior management recruitment services for insurance and
reinsurance markets w orldw ideNA NA NA
8/14/2014 MYOB Finance NZ Limited PayGlobal LimitedDevelops, implements, and supports human resource management (HRM) and
payroll softw are solutions primarily in New Zealand and Australia14.5 NA NA
8/5/2014 Undisclosed Shenzhen CJOL Human Resources Co., Ltd.Provides an information platform that features job listings from enterprises,
candidate’s database and new s, and policies of human resourcesNA NA NA
8/4/2014 Frontline Technologies Group LLC Aspex SolutionsProvides Web-based human resources softw are solutions to school districts,
park and recreation districts, municipalities, and non-profitsNA NA NA
8/1/2014 WageWorks, Inc. CONEXIS, a division of WageWorks, Inc.Offers Consolidated Omnibus Budget Reconciliation Act/HIPAA, f lexible
benefits, reimbursement, and direct bill administration solutions to companies118.0 NA NA
7/31/2014 National Financial Partners Corp. Benefit Resources, Inc. Benefit Resources, Inc. offers insurance consulting and brokerage services. NA NA NA
7/31/2014 Oracle Corporation TOA Technologies, Inc.Provides cloud-based on-demand mobile w orkforce management and f ield
service management solutions for large and medium-sized enterprises NA NA NA
7/30/2014 Qualcomm Technologies, Inc. Empow ered Careers Inc. Develops a learning platform to engage students and faculty on various devices NA NA NA
7/28/2014 Undisclosed Creative Financial Staff ing, LLC Provides accounting and f inancial placement services NA NA NA
7/22/2014 Softw are Workforce Metrics Limited Provides employee relations softw are NA NA NA
7/21/2014 Undisclosed DP&L Group Limited Engages in travel, trading, and recruitment businesses NA NA NA
7/18/2014 Arthur J Gallagher & Co. Foundation Strategies Inc. Operates as an employee benefits brokerage company NA NA NA
7/17/2014 ZIGExN Co., Ltd. Brain Lab Inc. Provides consulting and support services to recruitment companies 11.5 3.9x NA
7/15/2014 Brakston Grey, Inc. Servicios Empresariales Top Hire S.A. DE C.V. Brakston Grey, Inc NA NA NA
7/15/2014 Berry Recruitment Limited PRC Employment Limited Operates as a recruitment consultancy in the U.K. NA NA NA
7/14/2014 Allegis Group, Inc. Talent2 International Ltd. Provides human resource advisory, payroll, recruitment, and learning services NA NA NA
7/12/2014 Groupe ACTUAL SARL REALIS RH S.A.S Offers temporary employment services NA NA NA
7/10/2014 Ascentis Corporation Starfield TMS, LLC Provides cloud-based talent management softw are solutions NA NA NA
7/10/2014 Henderson Insurance Brokers Limited Corporate Risk Systems Limited Offers health, safety, and environmental training and risk management services NA NA NA
7/10/2014 UndisclosedCow an Benefits Consulting Limited, Human
Resources Advisory PracticeComprises a business division providing Human Resource consulting services NA NA NA
7/10/2014 The Adolfsen Group ISS Personalhuset AS Operates as a recruitment agency and is based in Oslo, Norw ay 56.8 0.4x NA
7/9/2014 Undisclosed Zebra Strategic Holdings LimitedProvides executive/staff search services and other human resources support
services in Hong Kong19.2 0.8x NM
7/8/2014 Restamax OyjStaff Invest Oy, Majority Stakes In 5 Companies
And Labour Hiring Services With Customer BaseComprises labor hire service operations 10.5 NA NA
7/8/2014Beijing Orient National Communication
Science & Technology Co., Ltd.Shanghai P&C Information Technology Co., Ltd
Designs and develops mobile f inancial systems and f inancial application
softw are for small and mid-size joint-stock banks and city commercial banks72.7 NA NA
7/7/2014 RP International Ltd Aero Appointments Provides aviation recruitment and executive search services NA NA NA
7/3/2014 Undisclosed Zebra Strategic Holdings LimitedProvides executive/staff search services and other human resources support
services in Hong Kong19.2 0.8x NM
7/3/2014 Davidson Recruitment Services Pty Ltd. ITCOM Australia Pty LtdProvides recruitment consulting services in the areas of technology, digital, and
project business disciplinesNA NA NA
7/2/2014 Staff line Group plc Softmist LimitedOperates as a training procurement consultancy specializing in government-
funded w ork-based trainingNA NA NA
7/2/2014 HireBetter LLC bkoAUSTINProvides human capital and consulting services, primarily serving the off ices of
the CFO and CIONA NA NA
7/1/2014 Payroll Select Nederland B.V. Zember B.V. and Meesterhulp B.V. Provides payroll and back off ice services NA NA NA
7/1/2014 EFactor Group Corp. HT Skills Ltd. Provides apprenticeship, recruitment and learning services in the w orkplace 10.7 7.6x NA
7/1/2014 PrincetonOne LLC Management Recruiters of Grass Valley, Inc.Operates as a retail recruiting company for management recruiters, providing
executive search, recruitment process outsourcing and contract staff ingNA NA NA
HR Software and Services Monthly September 2014
10
Select Recently Announced Financings (As of August 29, 2014)
Source: Company Filings, Press Releases, Capital IQ, Research Reports
($ in millions)
Announced Company Name Country Amount
Type of Financing
/ Round (if VC) Business Description Participated Investors in Current Round
8/20/2014 Grace Hill, Inc. U.S. Undisclosed UndisclosedProvides online education and learning management solutions for
multifamily housing professionals w orldw ideThe Riverside Company
8/20/2014 Lagou.com China $25.0 Series B Offers staff ing servicesQiming Weichuang Venture Capital Management (Shanghai)
Company Limited; Bertelsmann Asia Investments
8/19/2014 Hireku Inc. U.S. 15.0 Series BDevelops recruiting softw are and offers applicant tracking, hiring
collaboration, communication tools and social recruiting tools
Indianapolis, Los Angeles, Nashville, New York, Philadelphia,
Portland, Salt Lake City, San Francisco, Seattle and Syracuse
Bankers organized by industry focus and transaction expertise
Over 60 senior and associate equity research analysts, tracking
more than 500 companies across four major industry sectors
For additional information on KeyBanc Capital Markets’ HR Software & Services Practice, please contact any of the individuals listed below:
Disclosure: KeyBanc Capital Markets is a trade name under which corporate and investment banking products and services of KeyCorp and its subsidiaries, KeyBanc Capital Markets Inc., Member
NYSE/FINRA/SIPC, and KeyBank National Association (“KeyBank N.A.”), are marketed. Securities products and services are offered by KeyBanc Capital Markets Inc.and its licensed securities
representatives, who may also be employees of KeyBank N.A. Banking products and services are offered by KeyBank N.A. This report was not issued by our research department. The information
contained in this report has been obtained from sources deemed to be reliable but is not represented to be complete, and it should not be relied upon as such. This report does not purport to be a
complete analysis of any security, issuer, or industry and is not an offer or a solicitation of an offer to buy or sell any securities. This report is prepared for general information purposes only and does
not consider the specific investment objectives, financial situation and particular needs of any individual person or entity.
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