State of the HR Technology M&A market in 2025

A renewed sense of optimism is developing in the M&A market. Buyer interest levels are higher than we have seen in a long time, both among strategics and private equity firms. For high-quality assets, e.g., those that have continued to perform well despite the difficult market conditions, we see particularly high demand and competition among biding parties, resulting in a material valuation premium for those assets relative to peers.

It is not uncommon for buyers with strong conviction to move quickly and outbid slower-moving parties, while a high proportion of strategics have mandated buy-side advisors to help them source and screen opportunities.

​The momentum is underpinned by a belief that the difficult macro conditions of the last two years are coming to an end. This view is supported both by the cautious lowering of interest rates in major economies as well as by improving company KPIs. Technological innovation is also a major M&A driver.

Buyer interest has picked up significantly, both among corporate and private equity acquirers.
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For target companies that managed to deliver robust growth in the current environment, competition among buyers is very high and valuations are also at a premium

M&A valuation drivers

The constantly evolving competitive dynamics of the Work Tech ecosystem impacts the M&A priorities of prospective acquirers. At Venero Capital Advisors, we monitor these dynamics closely and track the M&A criteria of both strategic and financial acquirers.

The starting point for any M&A conversation is strategic fit. This includes alignment at the product, customer and geography level. Following that, certain KPI’s have an outsized impact on both buyer conviction and valuation. These tend to evolve over time and can vary based on the broader narrative.

Among these, the most notable shift we have seen in recent quarters is the emphasis on profitability. The narrative around profitable growth has been so strong that even VC-backed businesses steer towards breakeven ahead of their next funding round.

Key benchmarks for a premium valuation

• Revenue Growth
• Gross Revenue Retention
• Net Revenue Retention
• Profitability
• "Rule of X", whereby revenue growth is assessed in the context of EBITDA margin

Click here to download the full Venero report on the sate of the HR Tech M&A.

Venero Capital Advisors is the #1 ranked M&A advisor for HR Tech and Work Tech businesses globally. More HR Technology vendors select Venero as their M&A advisor of choice than any other investment bank.

Venero's exceptional coverage of the HR Technology space includes most recently advising LiveHire on its acquisition by Humanforce (backed by Accel-KKR), GoToro on its acquisition by Array Corporation, and Zest on its merger with Bloomin, just to name a few.

You can view Venero's HR Tech and Work Tech deal track record here.