HR & Worksoftware (US): 1st Quarter Update & 2021 Review

Work Software companies have demonstrated great resilience in turbulent times. In general, customers are not re-evaluating long-term enterprise software deployments. Companies positioned to contribute to the ‘work from home’ or hybrid economy have been rewarded with substantial pipeline growth and accelerating sales. Additionally, companies solving mission critical issues in the ‘Great Resignation’ and ‘Great Rehiring’ are seeing increased tailwinds. Organizations are increasingly turning to technology to help ensure business continuity through video interviewing and hiring coupled with remote on-boarding and off-boarding.

For those with less acceleration, the focus of buyers is on key metric improvement such as customer retention. The post-COVID lockdown period, starting in late 2020, blossomed into the best M&A and growth capital markets environment ever seen in Work Software. While the sheer number of blockbuster deals has decelerated somewhat from late 2020 and 2021, activity and valuations remain robust. Bottom line, the markets are open for great Work Software companies, even as public tech valuations have returned to historic norms

Private capital markets in tech remain incredibly strong while public markets have paused. In the quarter just completed, tech M&A is tracking above 2021’s blistering pace which saw a record $790B in deals announced, up 50% from 2020. The total number of transactions is also tracking ahead
by 33%(1). Driving private markets is the $1.3T of dry powder in the PE world and record fund raising by VCs. Meanwhile, exits via public markets have come to a screeching halt with the number of tech IPOs down 85% from prior year.