This is an overview of Mergermarket proprietary intelligence in the HR Tech sector in EMEA over the last three months, featuring existing opportunities in the market. Snapshot is the new name for a Preview.

Acquisition opportunities are flourishing in the human resources (HR) tech market despite generally adverse market conditions. The trend is being driven by a fast-moving employment environment and the surge of use cases for artificial intelligence (AI).

“There are now two tiers in HR Tech: mature companies which emerged largely unscathed from the valuation drop and newer players which favoured growth to profitability, with the former becoming credible buyers for the latter”, Matthieu Dordolo, partner and head of Capza Growth Tech at French private equity (PE) firm Capza said.

This October, French interim work expert Proman bought digital peer iziwork after competing with Adecco to take over the target placed into receivership by the Nanterre Commercial Court in September, as reported.

HR Tech is an umbrella term that encompasses tech solutions for the transformation of human resources, Dordola said. It includes improving work techniques, employee formation, hiring and talent management, he added.

The year to date (YTD) has seen the highest sector M&A deal value since 2019 with the exception of 2021, according to Mergermarket data. M&A activity in 2023 YTD has already exceeded the total deal value of the whole of 2022 with EUR 1.53bn invested across 19 deals against EUR 264.34m last year.

The HR-software sector is going through a period of consolidation; and it is an optimal time to find a buyer as it can be challenging for a software solution to survive in a stand-alone company, co-founder and CEO Albert Reynaud at French workforce-management software developer Semana told Mergermarket last month.

The market consolidation trend is also brought by the fact that “players increasingly need to offer a unified product with several tech solutions and build their platform from acquisitions”, Dordolo added.

Dutch software provider for HR and payroll BCS HR Software is on the hunt for smaller peers in Benelux and Germany with a revenue of up to EUR 12m, according to Charly Zwemstra, managing partner and chief investment officer at sponsor Main Capital Partners. It especially seeks HR automation add-ons in Benelux, with a revenue of around EUR 4m.

Mature players have enough cash on hand for their M&A strategy as they currently benefit from high customer growth. “The midcap corporates market is very dynamic, has a strong appetite for HR tech solutions without being as saturated as the large corporates market”, Dordolo said.

“Although the recruitment market is at a standstill, with companies favouring subcontracting and outsourcing, large tech players are still looking into acquiring IT staffing companies to acquire talent”, José Paiva, CEO and cofounder at Landing.jobs added.

As well as strategic interest, private equity (PE) firms have increasingly been looking into HR tech companies, including international funds, over the last few years. Large international funds are experts in consolidation strategies and are structured for carrying out that type of deal, adding that these funds have been looking into EMEA to consolidate their existing platforms in the US or Asia, a sector player said.

US PE fund Bain Capital has mandated Morgan Stanley and Evercore for a potential sale of UK-based HR and payroll software specialist Zellis Group, according to sources familiar with the matter, as reported this October. Deliberations remain at an early stage with a formal sale expected in 2024.

News of the sale has given Zellis has a score of 56 out of 100, according to Mergermarket‘s Likely to Exit (LTE) predictive algorithm.*

by Myriam Mariotte, Nelson Rodrigues and Arezki Yaïche, with analytics by Kiki Skarvelaki

*Mergermarket’s LTE predictive analytics assign a score to sponsor-backed companies to help track and predict when an exit could occur through M&A, an IPO, a direct listing or a deSPAC transaction. 

Proprietary Intelligence

Jobful (21/11)

Romanian developer of a gamified recruiting platform Jobful is aiming to raise up to EUR 3m in a late seed round, CEO and founder Mihai Cepoi said. The Bucharest-based company expects to launch the fundraising process in the second half of 2024. Ideal investors would be Western Europe and US-based venture capital funds with an interest in human resources technology. The firm raised a total of EUR 1m from angel investors and Romanian crowdfunding platform Ronin.

Adzuna (16/11)

Adzuna, a UK-based job search company, sees both domestic and international acquisitions as an important growth tool, and is in active discussions with potential targets, co-founder and CEO Doug Monro said. Businesses that generate revenue between USD 1m and USD 15m and operate in sectors closely related to Adzuna’s core operations are the focus. However, the company, which reported GBP 25.7m (USD 32m) of revenue in its latest fiscal year, is flexible about exploring larger transactions depending on the deal structure, the CEO said.

Flexee (15/11)

Flexee, a Poland-based provider of on-demand salary solutions, will be looking to raise up to USD 5m from a Series A round next year to finance international expansion, CEO Andrzej Nowak said. One Central Eastern European player already reached out to Flexee expressing an interest in being acquired which was receptive. Investors in the round could include international venture capital funds or family offices. Flexee secured funding from Koronea Family Office earlier this year, which bought out the business’s minority shareholders.

Factorial (12/11)

Spanish unicorn that offers management software to small- and medium-sized enterprises Factorial will complete its growth with acquisitions, CEO and co-founder Jordi Romero said. The Barcelona-based company executed its first deal this year and is looking for further acquisitions in Europe (Spain, France, Italy, Portugal, Germany, the UK), the US, Brazil and Mexico. Possible targets should be working on the management software sector, such as financing management or IT management. It is also interested in receiving approaches from advisors who have sale mandates.

Whoz (13/11)

Whoz, a French HR tech company that develops a SaaS solution for smart staffing and project portfolio management, is considering a Series B round in 1H24 to finance its US expansion, CEO and co-founder Jean Philippe Couturier told Mergermarket. It could raise more than its EUR 25m Series A, secured last year from PSG Equity. Whoz is already working with its historical advisor Cambon Partners to evaluate the potential new fundraising round. It will target an international large fund with a US scope and expertise in B2B SaaS solutions.

BCS HR Software (08/11)

Dutch software provider for HR and payroll BCS HR Software is on the hunt for smaller peers in Benelux and Germany with a revenue of up to EUR 12m, Charly Zwemstra, managing partner and chief investment officer at sponsor Main Capital Partners said. BCS HR seeks HR automation add-ons in Benelux, with a revenue of around EUR 4m, as well as larger targets in Germany with a revenue of between EUR 10m and EUR 12m. The EUR 35m-revenue company has an EBITDA of around EUR 10m.

DigitalWisers (08/11)

Turkey-based, Software-as-a-Service (SaaS) HR platform DigitalWisers is looking to raise a EUR 5m Series A round in 18 months to boost its international growth efforts, founder and CEO Erkan Yildirim said. Management plans to attract strategic and financial investors from Turkey, Europe and the GCC countries, who can bring new connections for the company. The business will offer a stake of around 10%-12% in the round. DigitalWisers forecasts EUR 740,000 revenue in 2024 and EUR 5.4m in 2025, and aims to break even by June 2025.

Landing.jobs (27/10)

Landing.jobs, a Portuguese information technology (IT) recruitment marketplace that matches talent and companies worldwide, has started discussions for a Series A funding round, CEO José Paiva told this news service. It is looking to raise between EUR 2.5m and EUR 5m to support the development and market launch of its extended IT workforce hub. Proceeds will be channeled towards hiring an international senior sales force, marketing and evolving and expanding its platform.

Semana (11/10)

French Semana, a workforce-management software developer, is receptive to sale talks with larger sector players, co-founder and CEO Albert Reynaud said. While it is not actively seeking a buyer, the company is receptive to approaches from interested parties. The Paris-based company could be a target for a range of companies including human resources-software providers, space-management platforms, real estate brokers, and flex office and co-working companies.

HROS.io (10/10)

HROS.io, an Austrian-Hungarian recruitment-tech company, is planning to raise up to EUR 5m in a Series A funding round by the beginning of next year, Maria Baumgartner and Zsolt Kelliar, executives and co-owners said. Management would negotiate a minority stake for the ticket and is already in talks with interested parties. The fresh funds are earmarked for product development, and scaling in Austria, Switzerland, Hungary, Serbia, Poland and Bulgaria.

Kolay IK (21/08)

Turkey-based HR-tech Kolay IK is looking to raise a USD 4m-USD 5m Series A round with a post-money valuation of over USD 30m next year, co-founders Tunca Ucer and Caglar Yali, said. The proceeds will generally be used for international expansion, including acquisitions, particularly in Eastern Europe and Scandinavia. Kolay IK posted annualized recurring revenue of USD 2.4m and a gross revenue margin of 84% as of March 2023.

Wellbees (14/08)

Wellbees, a Turkish HR tech dedicated to employees’ well-being, is looking to raise USD 4m through a Series A round to boost its business in GCC and the UK, and to penetrate the Saudi Arabian market, founder and CEO Melis Abacioglu told this news service. It planned to find a lead investor by September and to finalise the round by year-end. All the Series A funds will be spent on marketing and sales in its existing and targeted markets.