Tech M&A Update Human Capital Management: Power from the People

Transcription

1 since 1987 May 2015 INDEPENDENT INVESTMENT BANKING FOR GLOBAL TECHNOLOGY, MEDIA, MARKETING & INFORMATION Tech M&A Update Human Capital Management: Power from the People This month s letter is written by Jeff Becker, Managing Direcr & Co-Head of Technology Banking From time time, in our monthly JEGI TechM&A Update, we highlight a subsecr of the Tech universe that we find particularly interesting and dynamic. This month we are shining the spotlight on the Human Capital Management (HCM) secr, an area we first started tracking in 2002 and have stayed very active in since. Broadly described, this space includes software, services and consulting that help organizations better acquire, manage and optimize their own people resources help their organizations operate more effectively. Solutions in this area can cover the gamut, from sourcing/recruiting employee candidates, training and measuring their performance post-hire, the payroll/ compensation/benefits functions and administration. In addition, there are many other related areas, such as assessments, contingent workforce management, outplacement management and analytics, found across the whole spectrum of HCM. While much of our focus has hisrically been around software solutions for this market, increasingly we are finding lots of compelling activity in various services areas as well, particularly tech-enabled services. HCM is certainly a big-time market. HCM wasn t always viewed this way. About 10 years ago, when we first started attending the industry s flagship event, the HR Technology Conference, it was a nice, cozy gathering at the Navy Pier in Chicago. You could count on one hand the number of other investment banking, VC and PE professionals in attendance. We liked the fact that we knew something that others didn t that this space was ready explode. And sure enough, it has exploded. If the HR Tech Show is one measurement, then the secr has certainly hit critical mass in the past few years. The event is now held at the Mandalay Bay Hotel in Las Vegas, a venue so large that just trying meet someone for coffee means a nearly 15 minute trek from the exhibition floor the hotel Starbucks. Over 4,000 people attended in 2014, which included so many bankers, VCs, and PE partners that Brooks Brothers and Tumi should have opened a pop-up sre there. It s been a fascinating transformation watch and be a part of. More than 20 years ago, bankers (and many invesrs) would often ignore HR software companies, because HR wasn t viewed as a strategic part of the enterprise and didn t have the capital budget access required make seven-figure purchases of perpetual license software. But approximately 10 years ago, HR departments became one of the first adopt and benefit from the shift SaaS models (if you think about it, payroll with its service bureau-like business model of paying on a per-head, per-month basis was a candidate ripe for SaaS). Then Oracle bought PeopleSoft and let it languish for a while, allowing the first wave of SaaS Recruiting/Talent Management vendors (Taleo, SuccessFacrs, Kenexa, Cornersne OnDemand, etc.) emerge and become leading best-of-breed vendors. Just as this group started acquire and organically develop their way become broader suites, many of them got acquired by Oracle (Taleo), SAP (SuccessFacrs) and IBM (Kenexa) in , along with some of their learning software brethren (Plateau, Learn.com, OutStart, etc.), as the large global players began view the HCM market as fully ready for prime time. Along with others like Workday and LinkedIn, it may have appeared a couple of years ago that the HCM market was now largely played out and wouldn t be o interesting for start-ups and growth and private equity invesrs. Well, the HCM market may have taken a short moment catch its breath, but it has again returned being interesting and active, and this time in a broader array of areas. Instead of all the activity happening in a concentrated space around talent management, such as during the last boom in HCM, we are now seeing activity across a variety 1

2 of functionality for different parts of the HR organization, as well as across cusmer bases of differing sizes and in many different industry verticals. While the large vendors continue integrate their acquired solutions and sell the end--end suite vision, an increasing number of best-of-breed companies have emerged innovate and push the industry in the future. Invariably, some of these emerging HCM companies will also get acquired when the large vendors find their market opportunities large and ripe enough, but for now, we are enjoying watching many companies grow rapidly and begin achieve critical mass. Here are some of the areas where we have seen sizable market opportunities and interesting companies materialize: HCM for SMB Markets Companies such as Infinisource and Ascentis are figuring out how offer very complete and highly functional, yet right-sized, solutions for specific markets. These vendors provide fully integrated solutions that solve the problems that companies with up 5,000 employees need support the best practices that large enterprise solutions provide, while being easier and more efficient implement and sustain given their cusmers more limited resources. The SMB market had been vastly underserved until recent years. Vertically Focused Solutions The last wave of HCM offerings were largely horizontal in their approach. As in other areas of enterprise software, the next wave for HCM is likely see vendors emerge with solutions for problems particular certain industries. One great example of this is the huge potential market for hourly employees, which is often found in retail or other service industries. Companies like Jobaline and PeopleMatter are among the early leaders in this rapidly growing segment. Recruiting s Next Wave While the traditional ATS (Applicant Tracking System) is a mature market, designed for a handful of power users at enterprises, there is a strong push create solutions that fully utilize mobile and social technologies. These more nimble solutions will truly follow the sourcing/hiring/onboarding workflows that incorporate many users throughout the organization. SmartRecruiter and Jibe are two examples of companies look out for here. NAS Recruitment Innovation is doing what its name says in the recruiting marketing part of the secr. erecruit is an emerging leader in recruiting and back office software for the largest staffing companies in the world. Workforce Analytics This area has been talked about for years and is now ready for prime time. Over the past decade, organizations have implemented core talent management and HRIS systems, and they are now interested in taking the next step and using analytics (HCM s Big Data play) generate actionable intelligence help direct the organization as a whole be more efficient (e.g., What is the profile of our best employees? How do we best train our workforce meet their performance goals? How many people should be hired and where/when?). Some early leaders in this market include Visier and Workforce Insight, while SAP s and IBM s partnership announcement in early May integrate their HR solutions will bring a lot of HCM data IBM s Talent Insights (powered by Watson Analytics), likely driving this segment the forefront even faster. Many Other Areas There are still many other companies exploiting market opportunities throughout the HCM landscape that are worth exploring. Benefits administration and other benefits-related areas are seeing a great deal of activity with next-generation solutions, so keep sizable companies like Businessolver, Thomsons Online Benefits and GuideSpark on your radar screen. Assessments are seeing a resurgence, especially as a part of the analytics trend, where companies like PAN are very active. And on the other end of the HCM continuum, the career transition/offboarding space has become exciting with a company we have previously spotlighted, RiseSmart, providing an innovative tech-enabled service. It is clear that there is currently a great deal happening in the Human Capital Management space, and we believe there will be strong activity in this market for some time. Recently, there has been increased investment and acquisition activity as well. Many growth equity and private equity firms have been active, as we ve seen with Warburg Pincus acquisition of Payscale, Vecr Capital s acquisition of Saba and firms like Accel-KKR and Catalyst Invesrs taking significant stakes in multiple companies in the secr. Strategic acquisitions have become more common, with deals like Infor s acquisition of PeopleAnswers (>5x revenue), NetSuite s acquisition of TribeHR (double digit revenue multiple) and Skillsoft s acquisition of SumTotal, serving as just a few examples. 2

3 All of this innovation and deal activity are key reasons why JEGI is holding the JEGI Human Capital Management Symposium in New York on June 3rd. We look forward great insights coming out of our keynote and panel discussions, as well as presentations from a number of CEOs from high-growth, emerging, innovative companies across the HCM landscape. For additional details, please visit here: If you are interested in attending this exclusive HCM Symposium, please contact Christie Adams Haseln at christiea@jegi.com. These are our brief highlights for May. Please stay tuned for the next issue of our Tech M&A Update, and don t hesitate contact us discuss any pics related JEGI s Tech Coverage or your company s M&A strategy. Jeff Becker Joseph Sanborn Managing Direcr, Co-Head of Technology Banking Managing Direcr, Co-Head of Technology Banking Office: (212) Office: (617) jeffb@jegi.com josephs@jegi.com 3

4 Private Company Spotlight Celtra Each issue, we spotlight one later-stage private company for our audience. As long-time technology investment bankers, we will point out the characteristics that enable these companies be emerging market leaders and ultimately become compelling targets for strategic acquirers, as well as later-stage growth equity and private equity invesrs. Celtra provides multi-platform, data-driven brand display advertising solutions. The company is headquartered in Bosn, with offices in New York City, Chicago, Los Angeles, San Francisco, London, Tokyo, Sydney and Ljubljana. Invesrs include Fairhaven Capital Partners, GrandBanks Capital, RSG Capital and SoftBank Capital. We have known Celtra since it was a young company working out of one room in the Cambridge Innovation Center across the street from MIT. Today, the Company has nearly 150 employees and operates globally. We had an opportunity sit down with Celtra s dynamic CEO and Co-Founder, Mika Mikek, get his perspective on the complex market in which Celtra operates and how he has managed the Company s extraordinary growth. Celtra is positioned in a market full of buzz words, such as multi-channel branding, mobile advertising, rich media solutions, advertising and marketing technology, etc. What is the elevar pitch of the main problem(s) you are trying solve? Celtra empowers agencies, media suppliers and brand leaders with the leading creative technology for data-driven brand display advertising across all screens, including mobile, tablet and deskp. Most importantly, we are here innovate. We move fast keep shaping the future of advertising, answering the needs and problems of the everevolving display advertising industry with groundbreaking solutions, such as the just-released Programmatic Creative. Programmatic Creative is a self-service solution that enables marketers deliver the right dynamic message the right audience at the right time, at scale. We are also very diligent in developing new ad formats easily capture users attention and present advertising content in the best possible way. How do you define and size this market? How big of an opportunity is it for you? Our addressable market is all digital display impressions; however, we predominantly focus on mobile-first brand advertising. With the introduction of programmatic creative, we are putting a particular focus on audience buying campaigns that rely on data. Such highly targeted campaigns will very soon also leverage the creative make advertising messages even more relevant and personalized individual users based on context and behavioral hisry. We estimate that our addressable market is over $20B of global digital ad spend. What secret sauce does Celtra have that differentiates it from other vendors, big and small, that proclaim similar messages? We are the only true platform provider in this space. Unlike some other companies that can do similar things using many different managed services, we offer a very powerful self-service platform that allows our clients create, deliver and measure dynamic, data-driven cross-screen display ads at scale. Our platform supports programmatic buying and programmatic creative, performance optimized trafficking, in-depth tracking of media, engagement and video, crossscreen, advanced audience segmentation, responsive ad design, advanced video capabilities, and much more. We have long been impressed by the number and quality of cusmers you have been able win, even early in Celtra s life. Can you give us some representative case study examples of why clients chose you and how you have added value them? One of our most significant recent case studies was helping Time Inc. and Fox successfully promote the upcoming Gotham TV series on mobile and deskp. This campaign highlighted the cross-screen and deep video capabilities of our AdCrear 4 platform and produced staggering results across the board, delivering an incredible 800% boost in engagement, as compared Time Inc. s traditional deskp-only benchmarks. The case study is available here: 4

5 Another great example of a strong partnership is Celtra joining forces with MEC in January. The goal is pursue truly relevant advertising unite message and media and deliver highly engaging and effective real-time cusmer experience. See the case study here: Can you share with us some insight in the growth path of the Company in the past and looking forward? Our goal is reach $100M in SaaS revenue by 2017 (only software, no media included)! You have grown incredibly fast as an organization how have you managed the growth and maintained your company s culture? The entire management team is putting a lot of effort in this. We have grown up and become more serious in many different ways; however, the fundamentals of our culture are still very much the same. What excites you when you think about Celtra s future? I am excited by the gigantic potential ahead of us. It s as though Celtra just climbed the first hill and now has the view of the Himalayas. There is a lot more climb, but advertising on mobile devices has come a very long way, and I know that the future is much bigger than the past. 51

6 Hey, Did You See This? Archive Systems April 28, 2015 Archive Systems, Inc. a leading provider of Unified Document Management solutions, unveiled myfilebridge during the company s fifth annual User Conference myfilebridge turns the document management paradigm around and empowers individuals self-manage their documents. Accessible from any device, myfilebridge includes a modern, responsive interface that makes employee self-service a reality and eliminates handling paper documents. myfilebridge is part of the FileBRIDGE platform, a complete solution managing an organization s paper, images, and digital documents throughout their lifecycle. Crimson Hexagon April 21, 2015 Crimson Hexagon, the leading social media analytics software company, announced the addition of Affinities its ForSight analytics platform. Powered by ForSight s suite of technologies, algorithms and data visualizations, Affinities taps in more than seven years of social media data provide agencies and brands with insights about the interest areas of their cusmers and target markets. In turn, brands use the insights improve the ROI of a variety of marketing and organizational activities, from advertising buys consumer research brand messaging inbound marketing campaigns. erecruit March 12, 2015 erecruit, the leading innovar in enterprise staffing software, vendor management systems ( VMS ) and onboarding solutions, announced it has partnered with Fyre aumate the syncing of VMS positions and simplify candidate sourcing with its enterprise staffing software platform. erecruit s partnership with Fyre solves the major inefficiencies faced by all staffing companies working in the fast paced world of VMS fulfillment by enhancing the existing workflows of day and paving new roads of integration for the years come. In an environment where positions are filled in a matter of seconds, these innovative solutions will accelerate the way staffing companies prioritize and fulfill VMS positions. FieldLens May 1, 2015 FieldLens, a mobile field management platform for the construction industry, announced the launch of a new daily reporting feature unlike anything currently available in the industry. With FieldLens daily reports, field managers will use their smartphone or tablet log notes, take phos and videos, mark up drawings and capture manpower as they walk the jobsite. FieldLens will aumatically turn the day s field captures in a report, ensuring that all recorded items are noted as they happen, rather than having recall information when it s time construct the daily report. Fishbowl March 10, 2015 Fishbowl, the leading provider of a guest-centric marketing analytics platform the restaurant industry, announced a new technology leadership team strengthen its R&D investments. The team will focus on the expansion of the analytics platform and further integration with the company s , SMS, social, promotions management, and guest acquisition solutions. The new team includes the following technology veterans: Scott Weeren, COO; Sanjog Gad, CTO; TK Sreeram, VP of Engineering; and Parijat Jauhari, VP of Analytics Solutions. Globys May 5, 2015 Globys, the leading innovar in contextual marketing, announced the launch of Amplero, a self-optimizing personalization solution for mobile marketing campaigns powered by machine learning. The new Amplero solution uniquely leverages a continuous cycle of self-designed experimentation and machine learning aumatically discover and execute the optimal experience for each cusmer throughout the entire cusmer journey. The solution uses science-based target and control groups rapidly test thousands of combinations of cusmer, experience and execution contexts find targeting optimizations with statistically-valid lift. Glympse March 3, 2015 Glympse, the pioneer in location sharing technology, announced the latest version of the company s flagship app: Glympse for Aus. The company also announced its industry-leading location technology will be integrated in select Volkswagen and Peugeot models. With these latest aumakers on board, Glympse is now accessible within 10 leading car brands, in dozens of countries across the globe. With Glympse for Aus, users can quickly and easily share location from their vehicle by simply opening the app in a connected car, setting the recipient and timer, and hitting send. 61

7 Kanjoya May 5, 2015 Kanjoya CEO Armen Berjikly and Twitter Direcr of People Analytics Shane McCauley ok the stage at the HCI Summit in early April present Twitter s new model of employee engagement, powered by the Kanjoya Perception solution. This complete employee engagement solution analyzes open-ended text and detects qualitative emotions, attitudes, and intent which, when combined with quantitative metric, delivers powerful insights about employees. In addition, Twitter is generating, real-time insights from their people with frequent surveys and instantaneous analysis with Perception s real-time survey and analytics capabilities and enables sharing the appropriate views of the data the people who are impacted by and can improve engagement. Lighthouse ediscovery May 12, 2015 Lighthouse ediscovery, a leader in technology-enabled ediscovery services and consulting, announced the release of their corporate ediscovery benchmarking survey. The company s experienced consulting team crafted this survey allow clients easily understand their current ediscovery state, discover where their ideal state may be, and see how they compare similar companies. Lighthouse is currently offering online and in-person meetings so that corporations can benchmark their ediscovery programs, gain insight in any gaps they may have, and set clear goals for their program s future. Linkable Networks April 21, 2015 Linkable Networks announced the launch of Omnyverse, the first and only affiliate network with 100 percent digital offers, promotions and incentives. Built on p of Linkable Networks patented technology, Omnyverse enables retailers digitally engage shoppers with SKU-level or srewide promotions and coupons that are redeemed aumatically without paper, printing or promo codes. For the first time, retailers can leverage the efficacy of performance-based marketing drive and measure sales, whether mobile, online or in-sre, in a way that is easier and more rewarding for the shopper. Logfire May 12, 2015 LogFire, the leading cloud-based provider of supply chain fulfillment solutions, announced that more than 30 million order lines were received and shipped through the company s cloud-based digital fulfillment network in the first quarter of LogFire s digital fulfillment network increases invenry accuracy, sre service level agreements and overall fulfillment rates by close 100% by generating real-time perpetual invenry signals, providing a single view of invenry availability through their entire fulfillment network. LogFire also announced that the company had expanded its global reach in APAC and Africa. Marathon Data Systems January 25, 2015 Marathon Data Systems, a leading provider of Software-as-a Service (SaaS) solutions for field service and transportation and logistics industries, announced significant growth in Marathon increased its core recurring revenue and staff by over 30 percent, while adding 1,053 new cusmers. Marathon capped off a great year with significant growth across its three business segments of field service software, last mile transportation and logistics software and marketing services solutions with an expectation for even faster growth in each of these segments in PaySimple April 14, 2015 PaySimple, the leading provider of service commerce solutions small and midsize businesses (SMBs), announced its marketing team won the 2015 Revvie Award for Marke Masters: Marketing Team of the Year, SMB. The Revvie Awards highlight the most innovative Marke cusmers, partners and individual marketers whose programs have significantly impacted company revenue and built engaging, long-lasting relationships with cusmers through their use of Marke s engagement marketing platform. 17

8 Selected April M&A Transactions in JEGI Tech Coverage Buyer Seller Target Description Enterprise Value ($mm) Deals with Values (by size) Permira, CPPIB Informatica Corporation Data integration software & SaaS $5,335 Capgemini Group IGATE Global Solutions Outsourced IT services provider $4,000 MasterCard Applied Predictive Technologies (Accel-KKR) BI analytics & reporting SaaS $600 Twitter TellApart Personalized cross-device marketing SaaS $533 Francisco Partners ClickSoftware Technologies ERP & workforce management software $438 CyrusOne Cervalis Holdings Colocation & hosted services $400 NetSuite Bron Software E-commerce marketing aumation SaaS $200 Welsh, Carson, Anderson & Swe Simeio Solutions IAM security software $150 Epiq Systems Iris Data Services E-discovery services provider $134 Check Point Software Technologies K1 Investment Management Lacoon Mobile Security Mobile threat management software $80 Courion Corporation IAM security software $70 Cisco Systems Embrane Application-centric network virtualization software $55 SolarWinds Papertrail Cloud-based log management SaaS $41 WPP Medialets Mobile ad ROI software & services $22 GB Group Loqate GIS & validation software provider $13 Patriot National Vikaran Solutions Insurance claims management software $10 Deals without Announced Values (alphabetical by buyer) Aderant Holdings (Vista Equity Partners) Adobe Systems Timesoft Tumri (Collective Media) Legal billing & management software Online advertising software Amazon.com ClusterK AWS price prediction software Bigcommerce Zing Mobile retail POS software Box Verold 3D Web development ols 81

9 Buyer Seller Target Description Enterprise Value ($mm) CenturyLink Orchestrate Database SaaS Changepoint (Marlin Equity) barometerit Enterprise architecture management SaaS Dassault Systemes Modelon German engineering CAD & simulation software Enviance (Battery Ventures) FireMon (Insight Venture Partners) Remedy Interactive Immediate Insight Ergonomics & safety management SaaS Security data analytics software Francisco Partners HealthcareSource HR Employee recruitment SaaS provider Google Tilt Brush (Skillman and Hackett) Virtual reality painting software IBM Explorys Healthcare data analytics SaaS KPMG Triad Technology Partners, ServiceNow IT service management systems integration LinkedIn Refresh.io Predictive social software application Localytics Splitforce App A/B testing SaaS Merkle Pointmarc Online market intelligence consulting Microsoft Datazen Software Mobile BI analytics software Salesforce.com Toopher Two-facr authentication SaaS Securus Technologies (ABRY Partners) SRA International (Providence Equity) Jpay Qbase Holdings, Government Services Inmate payments app & services Data management SaaS provider Trimble Navigation HarvestMark Food & consumable tracking SaaS Twitter tenxer Team collaboration SaaS VeriFone Systems DoubleBeam Mobile POS payments apps VMware Immidio Deskp virtualization SaaS provider 91

10 About The Jordan, Edmisn Group, Inc. The Jordan, Edmisn Group, Inc. (JEGI) is the leading independent investment bank for the global technology, media, marketing services and information secrs. Over the past 28 years, the firm has completed more than 500 M&A transactions, serving global corporations, private companies, entrepreneurs, and private equity/venture capital firms. JEGI s senior bankers average nearly 20 years of M&A experience and personally lead each client engagement. Through the firm s broad network of industry contacts and a deep understanding of the markets that its clients serve, JEGI helps technology companies find their optimal strategic paths via exit or growth capital. The firm often identifies and completes transactions with outside the box buyers for its clients by leveraging its unique perspective and extensive high-level relationships across diverse markets. For more information, visit Select Recent JEGI Technology Transactions* a cloud-based provider of global sourcing and collaborative supply chain software solutions a leading software and data provider the agriculture market a leading event housing software and services provider a subsidiary of a leading tech-enabled search and digital marketing agency a leading provider of mobile workforce management solutions for field service a portfolio company of March 2015 November 2014 Ocber 2014 July 2014 a leading mobile app market intelligence and analytics provider a pioneer and leading SaaS provider of talent analytics HR and C-level professionals a full service competitive advertising tracking firm a portfolio company of a leading provider of shopping and shopper marketing software and services has received a significant investment from a portfolio company of has sold the leading provider of sales enablement and business intelligence SaaS solutions for $52,000,000 & May 2014 March 2014 Ocber 2013 May 2013 Ocber 2012 a global leader in digital engagement specializing in promotions and loyalty campaigns across mobile, social and web a SaaS marketing platform (CRM) for real-time, multi-stage, and multi-channel marketing including social media, , and mobile a pioneer and leader in mobile entertainment services the leading SaaS platform for retail transaction optimization solutions an online behavioral targeting network for approximately $95,000,000 August 2012 May 2012 May 2012 Ocber 2011 *Some of the transactions highlighted above were completed by JEGI Managing Direcrs Joseph Sanborn and Jeff Becker, prior joining the firm. Wilma Jordan Founder & CEO wilmaj@jegi.com Scott Peters Co-President scottp@jegi.com Tolman Geffs Co-President lmang@jegi.com Richard Mead Managing Direcr richardm@jegi.com David Clark Managing Direcr davidc@jegi.com Amir Akhavan Managing Direcr amira@jegi.com Joseph Sanborn Managing Direcr josephs@jegi.com Jeff Becker Managing Direcr jeffb@jegi.com Tom Pecht Managing Direcr mp@jegi.com Bill Hitzig Chief Operating Officer billh@jegi.com Adam Gross Chief Marketing Officer adamg@jegi.com Tom Creaser Executive Vice President mc@jegi.com Sam Barthelme Direcr samb@jegi.com 1 New York (Headquarters) 150 East 52nd Street 18th Floor New York, NY Phone: +1 (212) Bosn CIC Bosn 50 Milk Street Bosn, MA Phone: +1 (617) Atlanta 40 Wallace Road Buford, GA Phone: +1 (770) London (JEGI Affiliate) 90 Long Acre London WC2E 9RA Phone: Bangalore (JEGI Affiliate) Akash Embassy, 3rd Floor, #9, 3rd Cross Artillery Road, Ulsoor Bangalore Phone: