Boston, MA – Capstone Headwaters released its Q2 2020 Human Capital Management (HCM) SaaS Report today, reporting last twelve-month merger and acquisition activity was strong with 150 deals and dollar volume of $7.6 billion, predominantly occurring prior to COVID-19. In Q2 2020, deal activity fell to 25 deals compared to a record 48 deals in Q1. As the country gets back to work, Capstone Headwaters expects the HCM SaaS industry to rebound with some potentially new longer-term trends emerging as capabilities like remote employee management and increased use of outsourced contractors provide more staffing flexibility.
COVID-19 has had a larger impact on HCM SaaS companies than the broader SaaS universe as hiring freezes, layoffs, and workforces moving remote caused significant segment disruption. Stock prices in the HCM SaaS universe jumped 30.5% in Q2, roughly in line with NASDAQ, representing a quick rebound from the initial COVID-19 sell-off despite clear headwinds for the segment. The impact of COVID-19 on the HCM SaaS industry is largely split as solutions for freelancing and virtual training are experiencing strong tailwinds while businesses focused around hiring and core administration are typically struggling to add new customers as companies reduce investment and delay purchases.
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