HR tech: 5 PE-backed deals that bring innovation to workforce management

Human resource departments have had their hands full the last few years, thanks to the pandemic. Work from home, hybrid work, return to office – it’s all made managing employees more difficult than ever before. There’s been one saving grace, however, and that’s technology.

HR tech is suddenly on everyone’s minds, and private equity firms have noticed. PE firms are increasingly investing in specialized software developers that focus on solving problems specific to particular industries, such as healthcare, manufacturing and education.

Over the last six months, these five deals have caught PE Hub’s attention (in order of deal announcement date, starting with the most recent):

1. LLR takes ownership stake in healthcare HR company Viventium

LLR Partners, a lower-mid-market private equity firm based in Philadelphia, acquired post-acute healthcare human resources company Viventium in a deal for undisclosed terms that was announced in February but closed in January.

Post-acute healthcare encompasses home-care agencies, skilled nursing facilities, hospices and in-patient rehabilitation services, to name a few. The sector is rife with human capital management challenges that Viventium’s software helps to mitigate, LLR partner Sasank Aleti explained in an interview with PE Hub.

Employee turnover in those markets can be sometimes upwards of 50 percent, Aleti said. “In order for those businesses to operate, they need nurses and care workers to get into the facilities, and that high turnover makes things very difficult to serve their patients if they don’t have their people,” Aleti said.

2. Public Pension Capital invests in education HR tech company Edustaff

Also in January, Public Pension Capital made an investment in Michigan-based education staffing company Edustaff, with Monroe Capital providing transaction financing. The company provides teachers and educators to K-12 school districts and community colleges throughout the country. Edustaff currently serves over 550 customers across 11 states. Public Pension Capital is based in New York.

“At a time when schools’ challenges to staff their classrooms have never been greater, we’re excited to partner with Edustaff for the next stage of the company’s journey, and harness its excellent record of teacher placement and client satisfaction to expand its offering to new states and geographies,” said Tom Uger, partner and head of business and financial services for PPC, in the deal announcement.

3. Thoma Bravo portfolio company QAD acquires manufacturing HR tech company Redzone

Thoma Bravo portfolio company QAD completed the acquisition of Redzone, which develops manufacturing workforce management software.

Manufacturing teams are often divided amongst task or operation, and Redzone’s software aims to help managers and teams communicate and interact amongst themselves delegating responsibilities, tasks and more.

The software also allows cross-functional front-line teams across the supply-chain to communicate in real time with management – a game-changer for many manufacturing workforces, according to Redzone.

“QAD Redzone addresses some of the greatest productivity challenges manufacturers face today, including rising input costs, wage inflation and labor shortages,” QAD chief product officer Charles Sutherland said. “We have been incredibly impressed with the results Redzone customers are achieving; on average, manufacturers using Redzone have increased productivity by 22 percent, improved employee engagement by 74 percent and reduced staff turnover by 32 percent in just 90 days.”

4. Serengeti and Ghost Tree invest in AI-powered recruitment with Job.com

Serengeti Asset Management and Ghost Tree Partners invested in artificial intelligence-powered technology recruitment software provider Job.com. The investment aims to accelerate the delivery and development of the software company’s technology to fund further acquisitions in the recruitment and staffing sector, according to the deal announcement.

Job.com takes a data-driven approach to matching candidates to positions. They utilize AI and machine learning to not only match candidates, but provide an efficient consumer-level experience to those applying for positions as well. The software promises to provide control to both the job seeker and hiring institutions so as to come to mutually beneficial decisions.

5. Vistria purchases stake in benefits provider Flores & Associates

Chicago-based private equity firm Vistria Group purchased a stake in benefits technology provider Flores & Associates. Existing investor Century Equity Partners remains a stakeholder and holds equal ownership with Vistria.

The Charlotte-based company is an administrator of employer-sponsored reimbursement plans providing options for integrated benefits solutions – independent of insurance carriers. Flores provides support and service for reimbursement plans, COBRA, FMLA leave and direct bill programs, among others.

More deals ahead

PE Hub expects to see many more deals featuring innnovations in human capital management. In 2022, global HR tech deal transaction value achieved nearly $11 billion in 2022, an increase of 282 per cent since the pandemic in 2020, found a recent report from Hampleton Partners, a technology M&A advisory firm based in London.

“Organizations continue to face the challenge of finding, keeping and developing new hires to their full potential,” said Axel Brill, director, Hampleton Partners. “Combined with AI- and technology-based advances, these motivations are driving the HRTech market. As a result, what used to be a slow-moving corporate technology space a decade ago is now a multibillion dollar market of HR cloud solutions that address the needs for the future of work.”