Announcing: Climb Advisors Weekly M&A Deals Newsletter

CA Comment: Healthy multiple for a company that’s burning about 200% of revenue [ ($6.89m) in net income on $7.85m topline for ‘22 ]. Revenue doubled from 2019 to 2021 but has been close to flat since with net income decreasing over the period.

Banneker Partners, who invest in growing, mission-critical enterprise software businesses, bring a team of highly skilled operators and playbooks and our assumption is they’ll be looking to minimize burn early on. Banneker also has experience selling into local government with platforms:

* Linq, an ERP for K12 school districts

* Versaterm a full-service suite for first responders

* Core, a payments solution heavily geared towards municipalities and utilities

We would not be surprised to eventually see some merger between these platforms in a move to capture larger portions of spend for existing government customers.

Overall, this is an interesting space to watch - we speak with a lot of PE firms who love govtech due to the sticky nature - takes a long time to sell these contracts but once they’re in they tend to stay and don’t require much in the way of new features/research spend.

CA Comment: Gigster was acquired by PE firm Ionic Partners in 2021 and this marks the first announced add-on acquisition. It makes sense that a platform focused on finding, matching, and deploying developers would be interested to buy a product that evaluates dev competencies and comes with an engaged community.

Iconic Partners co-founder Andy Tryba is no stranger to this type of business, having previously run Crossover, a global talent sourcing, evaluation and management platform.

CA Comment: HR tech has been hot in recent years, with 2021 and 2022 hitting record highs in deal volume and total dollars transacted. There is a clear pipeline of these businesses starting out either in a niche vertical or as a point solution and broadening over time into a full suite offering. This is typically done through either growth investment, M&A of their own, or via partnering with larger acquirers. HR tech lends itself well to this full suite approach - it’s helpful for companies to be able to manage hiring, employee satisfaction and other associated factors such as benefits and payroll all in one place. Lever acquiring Employ in 2022 (link) is an example of consolidation in the space. Great report here that lays out some more activity.

Gemspring is experienced in HR tech, having acquired Radancy, a global talent sourcing platform, in 2018 and selling them to New Mountain Capital in 2022 (Gemspring retained minority stake in Radancy.)

CA Comment: No-code/low-code has huge potential in industries like insurance where F500 companies are deploying a large number of independent representatives across the world and a variety of business units. The biggest draws of no-code are: (i) structured data and (ii) ease of UX. When business users input raw text into a variety of forms and fields data often gets out of hand. Having unified forms builders across orgs ensure data fidelity and accessibility.

CA Comment: Similar to above, the power of structured data + AI is tremendous and can run both ways - ie AI works best off pre-structured data but AI can certainly be used to structure messy data. Unifai and Akeneo shared mutual customers in big-box/mid-market retail and both solve a key business problem - how to effectively manage thousands, if not millions, of product SKUs and listings across a brand. Without proper guardrails, AI could potentially make even more of a mess which is why Unifai makes great sense as a ‘rails’ acquisition.