HCM TECHNOLOGY SECTOR REVIEW | Q4 2018 · T E C H N O L O G Y , M E D I A & T E L E C O M PAGE | 3 HUMAN CAPITAL MANAGEMENT TECHNOLOGY SECTOR REVIEW | Q4 2018 HW’s TMT Group advised

HCM TECHNOLOGY SECTOR REVIEW | Q4 2018

T E C H N O L O G Y , M E D I A & T E L E C O M PAGE | 1

HUMAN CAPITAL MANAGEMENT TECHNOLOGY SECTOR REVIEW | Q4 2018

• 35 professionals across Boston, San Francisco, and London

H A R R I S W I L L I A M S ( “ H W ” ) T E C H N O L O G Y , M E D I A & T E L E C O M ( “ T M T ” ) G R O U P

• 330+ professionals across eight offices globally

• 160+ closed transactions in the last 24 months

• 10 industry groupsH O R I Z O N T A L F O C U S S E C T O R S

• Compliance Software

• CRM and Member Management Software

• Data & Analytics

• Enterprise Software

• Human Capital Management

• Infrastructure & Security Software

• IT& Tech Enabled Services

• Managed Services, Hosting & Data Center Solutions

• Online Marketing, Data & Research

V E R T I C A L F O C U S S E C T O R S

• Architecture, Engineering & Construction

• eCommerce & Retail Software

• Education Technology

• Energy Technology

• Facilities & Real Estate Technology

• Financial Technology

• Government Technology

• Healthcare IT

• Industrial & Supply Chain Software

J E F F B I S T R O N G+1 617-654-2102

A N D Y L E E D+1 415-217-3420

T Y L E R D E W I N G+1 617-654-2133

D A N L I N S A L A T A+1 617-654-2122

S A M H E N D L E R+1 617-654-2117

P R I Y A N K A N A I T H A N I+1 617-654-2115

M I K E W I L K I N S+1 415-217-3411

T H I E R R Y M O N J A U Z E+44 20 7518 8901

J U L I E N O U S S A D O N+44 20 7518 8909

S E L E C T R E C E N T H W H C M T E C H N O L O G Y T R A N S A C T I O N S

Provider of time and attendance management, staff scheduling, payroll and security management software products

Provider of administrative and clinical software tools as well as health care information management software

Employee scheduling solutions for retail and hospitality sectors

Offers courses for healthcare professionals and healthcare organizations & provides an online business-education library

Provider of grants management software solutions to the giving community in the United States and internationally

has been acquired by


has beenacquired by

Developer of business management software for businesses and non-profit organizations in the United Kingdom

has received a majority investment

from

has made a majority investment in

Provider of administration software, rules-based online benefits enrollment, data integration, medical and voluntary benefits, broker and HR admin dashboards



Provider of emergency care training intended to deliver safety and health compliance to communities and businesses



Provider of Workforce Management, Training, and Compliance Solutions for the Healthcare, Financial Services, and Real Estate Industries


Developer of business management software for businesses and non-profit organizations in the United Kingdom

has acquired a majority stake in

E R I K S Z Y N D L A R+1 415-217-3418



Solutions focused on sourcing, recruiting, interviewing, and on-boarding employees to an

organization

• Employee recruitment, engagement, and retention remain top of mind - especially as job market tightens

• Data-driven / market place tools are increasing connectivity for both enterprises and their contingent / on-demand workers

• Talent tools adopting machine learning, predictive analytics, assessment algorithms, and artificial intelligence

• Identification and recruitment of internal and known talent are corporate strategic initiatives

• Learning management systems and corporate learning, training and compliance content increasingly core to HR suite

Solutions focused on optimizing the efficiency and productivity of an

organization’s employees

• “Workforce as a Strategy” is increasingly driving companies to adopt data-driven technologies that remove friction from the employee journey

• Benefits and payroll solutions are fundamental to employee / employer connectivity with engagement and wellness proliferating

• HRIS automation is table-stakes as employers now shifting focus to productivity and collaboration enhancers

• Automated and comprehensive risk management / compliance tools continue to experience strong adoption

• Back office HR Capabilities for on-demand labor market is an emerging market opportunity

• Leading vertical-specific platforms remain highly attractive to investors and acquirers (e.g., retail, healthcare, and hospitality)



HW’s TMT Group advised OnCourse Learning, a portfolio company of CIP Capital, on its acquisition by Bertelsmann Education Group.

OnCourse Learning is a leading provider of eLearning, workforce management, and compliance solutions to enterprises and professionals across three high growth, highly regulated markets: healthcare, financial services, and real estate.

OnCourse offers a full suite of educational products including state and federally approved prelicensing and continuing education programs, accredited course content, exam prep tools, publications, e-books, events, and a sophisticated and customizable learning management system and course-authoring tool.

Bertelsmann SE & Co KGaA is a diversified media, services, and education company with operations spanning the globe. OnCourse joins the Bertelsmann Education Group’s family of leading digital education and services companies, including Relias, Udacity and Hot Chalk. As part of the transaction, OnCourse’s professional education segment will become a new entity within Bertelsmann Education Group while OnCourse’s healthcare segment will merge with Relias, a healthcare-focused e-learning, assessment and performance metrics business within the Bertelsmann Education Group portfolio.

R E L E V A N T H C M T E C H N O L O G Y S U B - S E C T O R S

C O M P A N Y O V E R V I E W

a portfolio company of


November 1, 2018



• Cast & Crew provides payroll processing, payroll invoicing and reporting, residual invoicing and reporting services to companies in the film and television industry. It also provides production accounting software

• Cast & Crew’s solutions simplify and automate complex processes for companies and productions in the film, television, digital streaming, commercial, and live events markets

• EQT will support Cast & Crew in its next phase of development as the Company focuses on accelerating product and service expansion in current and new verticals, while continuing to provide best-in-class service to its customers

EV: Confidential

Rev: Confidential EV / EBITDA: Confidential

EV / Rev: Confidential

• Simplywell offers customized corporate health and wellness programs focused on reducing health risks of employees, which enables employers to better manage healthcare costs and create a workplace culture of health and well-being

• Simplywell’s configurable wellness programs deliver results by connecting individuals to the technology, partners, and people needed to drive meaningful results and create healthy workplace cultures

• With the addition of SimplyWell’s condition management coaching, claims analytics, and reporting capabilities, Virgin Pulse can expand the breadth of its employee health and wellbeing offering by helping the risky employees manage costly conditions

EV: Confidential



• Glint provides a real-time employee engagement software platform designed to measure and improve employee retention rates

• Glint’s employee engagement platform uses real-time people data to provide information about organization's health, predicts risks, and prescribes actions

• Glint provides a powerful extension to LinkedIn’s existing talent business by providing greater visibility into the overall health and productivity of the people within an organization

EV: $400M



• Oasis Outsourcing specializes in providing human resources services, employee benefits administration, payroll and tax administration, risk management services, and staffing solutions

• Oasis serves more than 8,400 clients across all 50 states with its HR solutions, employee benefits, payroll administration, and risk management services

• Paychex’ acquisition of Oasis Outsourcing will strengthen its PEO growth strategy, gain scale for new products with the company’s insurance carrier partners, provide a new client base to offer Paychex retirement and time and attendance products

EV: $1.2B



• Cincinnati Time Systems provides timekeeping and workforce-management software which helps track employee time and attendance and manage workplace compliance

• Cincinnati Time Systems’ solutions help companies to optimize and manage employee costs, secure their facility, and comply with federal and state labor laws

• The acquisition allows Cincinnati Time Systems to leverage Ascentis’ scale and flexible HCM offerings and take advantage of the large cross-sell opportunity between both companies’ customer base

EV: Confidential





• The key strategic acquirers have combined for 38 HCM technology related acquisitions since 2015, but two of them (IBM and Oracle) have not completed a HCM acquisition since 2016

• Paychex is the only key strategic to complete an acquisition in Q4 2018: on December 21st, Paychex acquired Oasis Outsourcing for $1.2B

MOST ACTIVE STRATEGIC ACQUIRERS OF HCM TECHNOLOGY ASSETS BY VOLUME1

GLOBAL HCM TECHNOLOGY M&A ACTIVITY1

• HCM M&A experienced another strong quarter with 30 transactions, as M&A activity remains elevated despite choppy global equity markets

• HCM technology companies remain highly attractive to both strategic and financial acquirers

• Deal volume is robust supported by tuck-in acquisitions and platform building

16

7

20

612

21

12 12 14 11 14 1217

26

3830

45 43

5549

45

5951

57 59

49 51 51 54

69

93

111

Q1 - 15 Q2 - 15 Q3 - 15 Q4 - 15 Q1 - 16 Q2 - 16 Q3 - 16 Q4 - 16 Q1 - 17 Q2 - 17 Q3 - 17 Q4 - 17 Q1 - 18 Q2 - 18 Q3 - 18 Q4 - 18

Deals 4Q Trailing Total



Diversified Platforms

ERP Focused Platforms

R E P R E S E N T A T I V E P R O V I D E R S

Focused Solutions

To receive the latest Human Capital Management Technology market

map, please contact HW at [email protected]

mailto:[email protected]



HR

SO

FT

WA

RE

EV / 2018E EBITDA

EV / 2018E Revenue

0.5x 13.4x6.8x

3.4x 11.7x4.4x

BE

NE

FIT

S T

EC

HN

OLO

GY

EV / 2018E EBITDA

EV / 2018E Revenue

1.0x 12.8x3.8x

3.9x 39.7x21.8x

DIV

ER

SIF

IED

PLA

TF

OR

MS

EV / 2018E EBITDA

EV / 2018E Revenue

4.2x 6.4x4.6x

10.7x 15.6x13.1x

60

80

100

120

140

160

180

Jan-17 Aug-17 Apr-18 Dec-18

HR Software S&P 500

60

80

100

120

140

160


Benefits Technology S&P 500

60

80

100

120

140

160

180


Diversified Platforms S&P 500



–

PUBLIC COMPARABLES2

As of December 31, 2018 ($ in millions)

H U M A N R E S O U R C E S S O F T W A R E

Enterprise Market % of 52 1-Year Stock 3-Year Stock Revenue Growth 2018E EBITDA Enterprise Value / Price /

Company Ticker Value Capitalization Week High Performance Performance 2018E 2019P Margin '18E Rev. '19P Rev. '18E EBITDA '19P EBITDA Earnings

D I V E R S I F I E D P L A T F O R M S

B E N E F I T S T E C H N O L O G Y

HealthEquity Inc HQY-US $3,483 $3,722 58.7% 27.8% 137.9% (0.6%) 21.5% 39.5% 12.8x 10.2x 39.7x 25.3x 60.9x

Benefitfocus, Inc. BNFT 1,537 1,461 82.5% 69.3% 25.6% 0.1% 15.8% 3.3% 6.1x 5.2x NM 69.5x NA

WageWorks, Inc. WAGE 446 1,077 42.8% (56.2%) (40.1%) 7.1% 3.2% 30.0% 1.0x 0.9x 3.9x 2.8x 23.2x

Castlight Health, Inc. Class B CSLT-US 238 221 36.5% (42.1%) (49.2%) 17.8% 3.2% NM 1.6x 1.5x NM 58.0x NA

Benefits Technology Median $991 $1,269 50.8% (7 .1%) (7 .2%) 3.6% 9.5% 30.0% 3.8x 3.3x 21.8x 41.6x 42.0x

Microsoft Corporation MSFT-US $733,817 $779,805 87.4% 18.7% 83.1% 13.4% 11.5% 42.0% 6.4x 5.6x 15.5x 12.9x 42.1x

Oracle Corporation ORCL-US 181,468 162,040 84.4% (4.5%) 23.6% 1.6% 1.0% 46.3% 4.6x 4.5x 10.7x 9.8x 48.5x

SAP SE SAP-DE 122,673 122,081 77.9% (11.4%) 24.7% (3.6%) 8.4% 32.0% 4.2x 4.0x NA 12.3x 24.4x

Diversif ied Platforms Median $181,468 $162,040 84.4% (4.5%) 24.7% 1.6% 8.4% 42.0% 4.6x 4.5x 13.1x 12.3x 42.1x

Automatic Data Processing, Inc. ADP-US $13,509 $15,192 85.4% 11.9% 54.8% 7.1% 6.5% 22.9% 1.0x 0.9x 4.4x 3.8x 33.6x

Workday, Inc. Class A WDAY 34,366 24,112 92.5% 56.9% 100.4% 31.3% 25.5% 16.6% 13.1x 10.0x NM 53.1x NA

Paychex, Inc. PAYX 22,850 23,395 85.7% (4.3%) 23.2% 8.0% 7.7% 41.9% 6.6x 6.0x NM 14.4x 24.9x

Ultimate Software Group, Inc. ULTI 7,652 7,657 73.7% 12.2% 25.2% 20.8% 19.9% 24.3% 7.0x 5.6x NM 23.2x 154.8x

Paycom Software, Inc. PAYC 7,119 7,069 74.6% 52.4% 225.4% 29.3% 24.2% 41.8% 13.4x 10.2x NM 24.6x 60.6x

Ceridian HCM Holding, Inc. CDAY-US 5,487 4,761 76.7% NA NA 10.7% 8.8% 19.6% 7.3x 6.8x NM 30.9x NA

Paylocity Holding Corp. PCTY 3,256 3,179 68.1% 27.7% 48.5% 22.8% 20.6% 25.2% 8.2x 6.5x NM 22.5x 69.4x

Cornerstone Ondemand, Inc. CSOD 2,857 2,956 85.2% 42.7% 46.0% 9.9% 7.1% 17.1% 5.4x 5.0x NM NM NA

Upwork, Inc. UPWK-US 2,006 1,925 77.1% NA NA NA 19.2% 0.1% 9.9x 6.7x NM NM NA

Pluralsight, Inc. Class A PS 1,389 1,467 61.4% NA NA 38.2% 33.1% NM 6.5x 4.5x NM NM NA

Asure Software, Inc. ASUR-US 171 77 25.7% (64.0%) 12.6% 62.5% 17.9% 21.8% 2.1x 1.6x 11.7x NM NA

DHI Group, Inc. DHX-US 89 80 46.8% (20.0%) (83.4%) (22.3%) (4.7%) 19.6% 0.5x 0.6x 3.4x 2.7x 4.7x

HR Software Median $4,372 $3,970 7 5.7% 12.2% 46.0% 20.8% 18.5% 21.8% 6.8x 5.8x 4.4x 22.9x 47 .1x



–

SELECT RECENT M&A TRANSACTIONS2

Announced Date Target/Issuer Buyer Descr iption Enterpr i se Value ($m)

12/20/2018 Cielo, Inc. Permira Advisers (London) Ltd. Provides global talent acquisition and management solutions. NA

12/20/2018 Koru Careers, Inc. Capp & Co. Ltd. Business and assets related to hiring solutions services NA

12/19/2018 Spigit, Inc. Planview, Inc. Provides innovation management software for the enterprise. NA

12/18/2018 Hire Edge Consulting, Inc. TransForce, Inc. (United States) Provides staffing services for the transportation industry. NA

12/18/2018 Acendre Pty Ltd. Strattam Capital Management LLC Provider of solutions for talent management, workforce planning, and onboarding. NA

12/11/2018 Cincinnati Time Systems, Inc. Ascentis Corp. Provides time management and workplace security solutions. NA

12/10/2018 Cast & Crew Entertainment Services LLC EQT AB Provides technology-enabled payroll and production-management services to the entertainment industry. NA

12/10/2018 Mondo Addison Professional Financial Search LLC Provides specialized digital marketing and information technology services. NA

12/05/2018 Technical Training, Inc. GP Strategies Corp. Provides staffing and recruitment, learning products, market research, and consulting. $16.2

12/04/2018 Connectics Search Associates LLC WorkForceConnexion Recruiting Solutions LLC Provides electronic recruitment services. NA

11/27/2018 Simplywell, Inc. Virgin Pulse, Inc. Operates as a wellness and health engagement company. NA

11/26/2018 Oasis Outsourcing Holdings, Inc. Paychex, Inc. Provides staffing and payroll services. $1,200.0

11/08/2018 Critical Metrics LLC Talmetrix, Inc. Provides management consulting services. NA

11/08/2018 Jaray Software, Inc. ServiceTitan, Inc. Provides service business management software for plumbing and other industries NA

11/07/2018 Grovo Learning, Inc. Cornerstone OnDemand, Inc. Provides an online education and training platform. $24.0

11/07/2018 The Muse Talentshare Provider of career and employment platform. NA

11/05/2018 Eliassen Group LLC Stone Point Capital LLC Provides technology staffing and consulting services. NA

10/31/2018 Survivex Ltd. 3t Energy Group Ltd. Provides survival and industrial skills training services. NA

10/22/2018 Cambridge Consulting Group LLC NFP Corp. Operates as an insurance and financial services consulting firm NA

10/16/2018 TalentToday Medix Provider of a social and data-driven career guidance application designed to improve career success NA

10/08/2018 Glint, Inc. Microsoft Corp. Provides a real-time employee engagement platform for organizations. $400.0

10/08/2018 Mettl Mercer Provider of an online assessment platform designed to track and measure technical, aptitude and psychometric skills. NA

10/01/2018 CDI Corp. Artech Information Systems LLC Provides of engineering, information technology and staffing services. NA



11/19/18 Series C $32 $162 Bain Capital Ventures, Teusday Capital, Sequoia Capital, PivotNorth

Capital

Developer of an on-demand staffing platform intended to

connect companies with temporary workers

10/29/18 Series B $13 $213 Line Capital, Mirai Creation FundProvider of a technology platform intended to be used for

innovative advertising and publishing

10/25/18 Series A $7 $29 AXA Venture Partners, Dowing VenturesProvider of a data-driven and engaging recruitment platform

intended to revolutionize and simplify tech recruitment

11/01/18 Series A $11 $26 Leerink Revelation Partners, Longmedow Capital LRVHealth

Developer of an intelligent healthcare workforce management

platform intended to assist in hiring nursing and healthcare

staffs

10/03/18 Series A $5 $25 Bullpen CapitalProvider of an interview process management platform

designed to link interview candidates with the right interviewers

11/07/18 Series A $2 $3 Bain Capital Ventures; Saas Ventures; TDF VenturesProvider of an online recruitment platform designed to

streamline the hiring process

10/29/18 Series A2 $5 $6 FundersClub, Inc.; Initialized Capital Management; Y CombinatoProvider of cloud-based retail operations solutions including

inventory, order, vendor and product management.

10/23/18 Series C $100 $146 Warburg PincusProvider of compliance and supply chain data management

software.

10/23/18 Series A $7 $7 e.Ventures; Firstminute Capital; Notion Capital Ltd.Provider of integrated forecasting and reporting software to

small businesses.

10/16/18 Series A $67 $67 Summit PartnersProvider of cloud-based aftermarket supply chain management

software to manufacturers.

10/01/18 Series C $45 $90 Insight Venture Partners; OpenView; Pritzker Group; Chicago VenturesProvider of a cloud-based shipping management platform for

multi-modal shipments.

Note: Financial information presented above represents reported capital raised only.

GoodTime



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HCM TECHNOLOGY SECTOR REVIEW | Q4 2018 · T E C H N O L O G Y , M E D I A & T E L E C O M PAGE | 3 HUMAN CAPITAL MANAGEMENT TECHNOLOGY SECTOR REVIEW | Q4 2018 HW’s TMT Group advised