Software sub-sector insights: HCM Q1 2025
Date 17 Febbraio 2025
In our latest Software Insights release, the team covers the Human Capital Management (HCM/HR Tech) sub-sector and provides perspectives on 2024 valuations, M&A and key trends, as well as the outlook for 2025.
Key highlights include:
- HCM valuations exhibited a consistent upward trend, with acceleration during H2, underlining the continuing tailwinds in the sector.
- Mid-market vendors with mission critical solutions are outperforming enterprise-focused players, who face longer sales cycles and delays in strategic decision making.
- HCM software is becoming a more strategic tool, embedding across the HCM ecosystem.
- PE & Corporate M&A activity showed a 20% increase whilst VC activity was slightly down year on year.
- Record PE dry powder is driving buyouts, with longer hold periods likely to boost exits through 2025.
Robert Young, Managing Director at Alantra commented: “The HCM software landscape is continuing to evolve as we’re seeing players seeking to expand their breadth of capability through integrations or partnerships. Point solutions are now transforming into strategic tools, connecting and streamlining the broader HCM ecosystem. As a result, we expect the more agile players to continue to take wallet share from the ‘one-stop’ behemoths, through offering greater depth and flexibility to meet the evolving needs of customers”