New York, Munich, May 8, 2023 – Drake Star is pleased to publish its Q2 2023 Global HR Tech Market Report, which provides in-depth insights into the latest capital market developments, M&A and private placement activity, and includes an exclusive Q&A with leading industry entrepreneur Abakar Saidov (CEO & Co-Founder of Beamery).
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“HR Tech remains a key focus area for investors as there is an unprecedented demand for innovative technologies that digitize the workplace and enhance the employee experience throughout the entire employee lifecycle. Throughout Q1 2023, investment activity in the space has accelerated and HCM & Talent Management public market valuations are on the rise.” said Ralf Philipp Hofmann, Managing Partner & Co-Founder of Drake Star
Jim Holzer, Managing Partner at Drake Star, adds: “Despite economic headwinds, we are seeing an active M&A and private placement market in HR Tech. In Q1 2023, excluding the Qualtrics going private transaction, the HR Tech M&A market posted an over 2x increase in disclosed deal value over Q4 2022 on about the same number of completed transactions. During Q1, the amount of fund raising increased by 27% with $1.45 billion raised.”
The Drake Star Global HR Tech Report provides a detailed overview of M&A, financing, and capital markets deal activity in Q1 2023:
- M&A deal activity remained stable throughout Q1 2023, despite the overall challenging market sentiment, resulting in 45 M&A deals in Q1 ’23
- Total M&A deal volume increased massively, driven by Silver Lake's take-private of Qualtrics, which valued the company at $12.5 billion
- After a slowdown in the third and fourth quarters of 2022, affected by economic uncertainty and rising interest rates, the private funding market recovered slightly in the first quarter, which points to a positive outlook for 2023
- The public markets for human capital and talent management also showed promising growth, with an 8% increase in the first quarter of 2023, indicating positive investor sentiment towards the sector
Key HR Tech technology trends for 2023:
- Ongoing secular changes in the workforce are driving hiring activity given the continuing unfulfilled demand for talent
- Employees remain in the driver’s seat – resulting in accelerated adoption of technology driven solutions including AI
- HR Tech stack vendors will continue to combine point solutions into comprehensive suites
- DEI and compliance is crucial to both regulators and employees
- Talent retention and employee engagement will remain a mainstay
- 2023: The year of internal mobility empowered by the adoption of talent marketplaces
- The Rise of the employee-centric organizations will make HR analytics tools indispensable
Drake Star’s capital markets outlook 2023:
- A key M&A driver will be HR Tech players adding new technologies (including AI) to their solutions to create more extensive functionality and new market categories. This trend will be especially noticeable with employee experience and talent intelligence platforms
- Another trend, fuelling 2023 HR Tech M&A activity is consolidation by large HR Tech players acquiring competitors or adjacent businesses to create improved market positioning. Areas of interest can be identified within talent acquisition (e.g. Employ a PE-backed rollup), talent management (e.g. Cornerstone) or learning management systems and content (e.g. LTG Group)
- Finally, large HCM players, such as Workday, Oracle, SAP and UKG are likely to participate in further M&A activities to fuel further innovation and improve customer satisfaction
- Despite a rather cautious outlook on the world economy, we expect continued growth in HR Tech M&A and fundraising activity in 2023, outperforming the overall tech M&A market
Global HR Tech Team: Ralf Philipp Hofmann, Jim Holzer, Pablo Lundershausen, Connor Cunningham, Maximilian Hönig
For further inquiries, please contact:
Ralf Philipp Hofmann
Managing Partner & Co Founder,
Member of the Global Executive Committee
+49 173 3930 070
+1 212 508 7103
About Drake Star
Drake Star is an award-winning global tech investment bank that has completed over 400 transactions since 2013. Drake Star team of over 100 senior professionals across offices in New York, London, Paris, Munich, San Francisco, Los Angeles, Berlin, and Dubai* focuses on mergers & acquisitions and corporate finance services worldwide in Consumer & Retail Technology, Digital Media, FinTech, Mobility & Sustainability, Software/SaaS, Digital Services, and Industrial Tech sectors.
Drake Star is the marketing name for the global investment bank Drake Star Partners Limited and its subsidiaries and affiliates. In the USA, all securities are transacted through Drake Star Securities LLC. In the USA, Drake Star Securities LLC is regulated by FINRA and is a member of SIPC. Drake Star UK Limited (FRN 942020) is an appointed representative of Kession Capital Ltd (FRN582160), which is authorized and regulated by the Financial Conduct Authority. © 2023 Drake Star Partners Limited.
For more information, visit www.drakestar.com.