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

KEY DRIVERS AND MOTIVATIONS FOR ACQUIRERS + EXPANDING CURRENT PRODUCT OFFERINGS Trade acquirers seek targets that fill gaps in their HR solutions portfolio. Their M&A strategy is driven by offering a more comprehensive suite to their clients. For example, an HR software suite provider might acquire a niche recruitment or engagement platform to round out its offerings. + GEOGRAPHIC AND MARKET EXPANSION Many trade acquirers pursue M&A to enter new markets or customer segments. In the UK, overseas buyers have been very active, with American firms acquiring UK HR companies to gain a foothold in the UK. These cross-border acquisitions allow strategic buyers to access new client pools and regions quickly. + ACQUIRING INNOVATION (TECH OR TALENT) Rather than developing new capabilities in-house, trade buyers opt to buy innovative companies to stay ahead. For example, Zoom acquired Workvivo to enhance its employee engagement capabilities. The motivation is to import cutting-edge technology with the skilled teams behind it. + RESPONDING TO CLIENT NEEDS FOR ONE-STOP SOLUTIONS Clients are increasingly looking for ‘one-stop shop’ solutions, preferring to deal with fewer vendors for their HR needs. This pushes trade acquirers to broaden their solution spectrum through M&A. For example, UKG (Ultimate Kronos Group) acquired Immedis, a global payroll provider. UKG’s aim was to integrate Immedis’ multi-country payroll into its HCM suite, providing a more complete solution for customers. Trade buyers are motivated by the ability to better serve their customers’ end-to-end HR needs, which often means acquiring the capabilities they lack.