Work Tech investment activity by volume picked up around 20% in Q3, with 181 deals disclosed vs. 150 in Q2. Growth came primarily from early-stage rounds, resulting in an average investment size of €18.1m. And  M&A activity was very robust, with 336 acquisitions in total during the first three quarters of the year, putting 2024 on track for record deal volumes. However, many Work Tech businesses have been reporting decelerating growth rates, and this is being reflected in their valuations. 

Most WorkTech businesses had a difficult trading in the last 18 months, with business spending and hiring remaining subdued across Europe and North America. Still, the first two quarters of the year show a booming M&A market and gradual recovery in VC sentiment. We expect the latter to accelerate in the coming quarters, especially for later-stage financings as investors resume their support for the new wave of leaders in the space. Every quarter seems to be better than the previous one, and Q4 could be the strongest we will have seen in two years. 

The first quarter of 2024 kicked off with a 30% quarterly increase in VC funding, but deal volume remained flat. Revenue growth for most businesses slowed materially in 2023. So what are the most recent expectations for the coming quarters? In this report we explore what the Q1 numbers mean for the sector, what is the outlook for 2024 and 2025, how has M&A activity been developing, and what are latest valuation multiples and trends.

PARIS, FRANCE – January 16, 2024 – Bloomin, a Paris headquartered software specialist in Employee Feedback and Employee Experience has announced its combination with Zest, the French leader in the Employee Experience and Performance market. Venero Capital Advisors acted as exclusive financial adviser to Bloomin.
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The combined entity will be positioned as the Number 1 Made in France software suite dedicated to employee engagement, responding to a growing demand on the French and European market. The consolidation will enable both companies to innovate faster and provide better support for their SME and large-enterprise customers, positioning Zestmeup as an alternative to major US software publishers such as Workday and Qualtrics.

As 2024 gets underway, companies and investors across all sectors look forward to a respite from the difficult narrative of 2023. In this report, we look at what happened in HR Tech and Work Tech during the last 12 months, including: historical and projected company growth rates, investment activity breakdown, M&A activity, trading and transaction valuation multiples, notable transactions. 

ATHENS, GREECE – December 18, 2023 – SOFTONE Group of Companies, the leading provider of cloud-based business software in Greece and SE Europe, announces the acquisition of 100% of the share capital of Sunsoft, a leader in the production of ERP and other advanced IT systems for catering and hospitality businesses. This strategic investment signifies SOFTONE Group’s entry into one of the most vital sectors within the Greek economy, characterized by substantial growth potential. Venero acted as exclusive financial advisor to Sunsoft.

M&A activity held up surprising well during the first half of 2023, with 155 announced acquisitions. This is not far off the robust levels seen in the dealmaking boom of the 2021-2022 post-Covid era. Buyers have remained active, and valuations have shown signs of recovery after contracting by c. 35% last year. 
 
Growth remains the primary valuation driver for M&A. However, increasingly it is assessed in conjunction with capital efficiency, profitability, or with the potential for a business to achieve breakeven in the near term. 
 
Equity funding reached $6.1 billion in the first six months of the year, putting 2023 on track to be the third best year in terms of funding for the sector. However, this amount was invested across 274 transactions, which is a record low number of deals for the sector. 

LONDON, UK and COLMAR-BERG, LUXEMBOURG, June 19, 2023 – Venero further strengthens its unmatched expertise in HR Technology M&A with the appointment of Thierry Vanbever as Managing Director, European Coverage.

With more than 30 years of experience, Thierry is a highly regarded M&A and corporate development practitioner with a deep focus on HR Technology and Payroll Services. Prior to Venero, Thierry spent 15 years at SD Worx, one of Europe's largest providers of People Solutions, most recently as Director of M&A and Alliances, and Managing Director International, responsible for the development of SD Worx across key European markets.