KBS - Human Resource Management and Human Capital Management - Market Insight

CURRENT LANDSCAPE The human capital management sector experienced a surge in M&A activity around 2021–2022. Deal volume hit a historic peak of 474 transactions globally in 2022 – the highest in a decade. This was in stark contrast to pre-pandemic levels and well above the average of 266 deals per year from 2016–2020, reflecting a subsequent increase in HR tech and services acquisitions.

Continuing this trend in 2024, through Q3 there had been $7.2bn of invested equity in HR tech and 37% of M&A transactions in the sector during the third quarter had taken place in Europe.

The UK HR M&A market has been resilient. In the recruitment sub-sector, deal flow held steady at roughly 15 completed deals per quarter throughout 2023 and into 2024. While this pace is below the 2022 spike (when 75 UK recruitment deals closed post-lockdown), it remained strong with 58 deals in 2023 and ticked up to 63 deals in 2024. Both strategic buyers and private investors continue to view HR tech and services as attractive targets. According to market advisers, HR tech “remains a key focus area for investors” due to unprecedented demand for workplace digitization and employee experience tools. Even in Q1 2023, amid economic uncertainty, the HR tech M&A market was active with 45 deals, and total disclosed deal value more than doubled from the previous quarter, with Silver Lake completing a $12.5bn acquisition of Qualtrics.

Continuing this trend in 2024, through Q3 there had been $7.2bn of invested equity in HR tech and 37% of M&A transactions in the sector during the third quarter had taken place in Europe.