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Q12026Activity

HCMM&Aactivitycooledmodestlytostart2026,with52acquisitionsclosinginthequarter(down9%YoY)as strategicbuyersandsponsor-backedplatformscontinuedtopursueadd-onacquisitionsacrosstheemployee lifecycle.UnlikeQ42025,thequarterdidnotproduceaheadlinemega-deal.Thestorywasinsteadalongtailof smaller,category-focusedtransactions,withactivityconcentratedinhiringtools,compliance,compensation andbenefits,andworkforcemanagement.TheIPOwindowforworkforcetechnologyremainedeffectivelyclosed, extendingamulti-quarterdroughtthathaspushedlater-stageprivatecompaniestolookprimarilytostrategic acquirersandsponsorplatformsforliquidity.

Ventureactivityhascontinuedthetrendoffewer,largerrounds.VCdealcountfell50%YoY,whiletotal fundraisingfelljust7%.Checksizesattheearlystageshavelargelystabilized,whereaslaterstageaverages continuetogrow,nowsittingaroundthe$70Mmark.Investorshaveprimarilyfocusedonasmallergroupof categoryleaders,andQ12026wasaclearexampleofthatdynamic:Vestwell's$385MSeriesEata$2B valuationandGarnerHealth's$118MSeriesData$1.35Bvaluationtogetheraccountedfornearly40%ofthe quarter'stotalfundraising.Notably,bothroundscommandedameaningfulstep-upinvaluation,asignthat segmentleaderswithestablishedscalecontinuetoattractinterestevenastheearly-stageenvironmenthas tightened.

COREHR

CoreHRonceagainledthethreesub-sectors,recording23acquisitionsinthequarteralongsidethelargestventureroundinHCM: Vestwell's$385MSeriesEata$2Bvaluation.M&Aactivityremaineddefinedbyacceleratedconsolidation,withinternationalstrategies extendinggeographicreachandadjacentfintechandpayrollplayerspushingdeeperintotheHRstack.Ontheventureside,acleartheme hasemerged:investorsareputtingmeaningfulcapitalbehindplatformsthathelpemployeesgetmorevalueoutofthepayandbenefits theiremployersalreadyprovide,withVestwelljoinedbynameslikeGarnerHealth,BenefitBay,andPasitoinQ1.

•GryphonInvestorsacquiredHRSoft,acompensationmanagementandtotalrewardsplatformsignifyinganothersponsor-ledbeton specialized,durablecompensationtech.

•Streamraiseda$90Mroundtoscaleitsearnedwageaccessplatform,whichletshourlyworkerstapintoearnedpaybeforepayday, whichisacategoryincreasinglytreatedasacorefinancialwellnessbenefitforprimarilydesklessindustries.

TALENTACQUISITION

TalentAcquisitionrecorded18transactionsinQ1,withdealflowcontinuingtoshiftdecisivelytowardAI-nativerecruitingtools.The narrativethatemergedin2025,buyersreplacingworkflowautomationwithconversationalandagenticAI,carriedintothenewyear,with thisquarter'sdealsconcentratedinscreening,assessment,sourcing,andinterviewingtechnologyratherthantraditionalATSorCRM infrastructure.Sponsor-backedplatformsandstrategicsalikeusedthequartertodeepentheirAIcapabilities,andseverallargerventure roundspointtothesamedirection.

•HireVueacquiredWeCP,atechnicalskillsassessmentplatformforengineeringhires,deepeningitsAI-ledinterviewingstackforhighvolumetechnicalrecruiting.

•FindemacquiredGliderAI,addingAI-drivencandidateassessmentstoitssourcingplatform,whichisamovetowardaunified "source-and-evaluate"decisioningtool.

TALENTMANAGEMENT

TalentManagementwasthequietestofthethreesub-sectorsbutremainedactive,recording11acquisitionsalongsideseveralnotable venturerounds.Activityclusteredaroundemployeeexperience,learning,andengagement,withthequartermarkedbyanemphasison stitchingtogetheran"end-to-end"talentplatformwithhiringdecisions,internalmobility,skills,coaching,andlisteningallintegratedinto onelayer.Phenomwasthequarter'smostactiveacquirerwithtwodeals,whilelater-stageventureroundsreflectcontinuedinvestor convictioninplatformsconnectingemployeedatatodevelopmentoutcomes.

•PhenomacquiredIncludedAI(bias-awarehiringdecisions)andBeApplied(skills-basedassessments),buildinganAI-native experiencelayerfromhiringthroughinternalmobility.

•Doceboacquired365Talents,askillsintelligenceplatform,acceleratingitsshiftfromLMStowardabroadertalentdevelopmentsuite.

•PerceptyxacquiredLyceum,anAI-nativelearningplatformthattransformsstatictrainingcontentintodynamicexperiences,linking itsemployeelisteningdatadirectlytoindividualdevelopment.

HCMFinancingActivity

Q12026FinancingActivitybySub-Sector

Continuingthecadenceofthepreviousfourquarters,Q12026had2roundsexceedingthe$100Mmark.

HCMFinancingSummary

Compensation& Beneﬁts

$385M FEB2026

RECEIVEDINVESTMENTFROM

Compensation& Beneﬁts

$118M FEB2026

RECEIVEDINVESTMENTFROM

Compensation& Beneﬁts

$90M JAN2026

RECEIVEDINVESTMENTFROM

HiringTools

$80M MAR2026

RECEIVEDINVESTMENTFROM

GrowingAverageDealSizes

Early-stageVCdealsizeshaveplateauednear$15M, whilelater-stageroundscontinuetheirupwardtrajectory, nowaveragingnearly$70M

20192020202120222023202420252026

Early-StageVCLater-StageVC

FinancingActivity

HCMUnicornTracker

Aftertwoquarterswithnonewunicornentrants,bothGarnerand Vestwelleclipsedthe$1BvaluationthresholdinQ1.

HCMPublicMarkets

ComparativeMultiples–Last30Months

ThepublicHCMsector'svaluationresethascontinuedintoQ12026,withallthreesub-sectorsstilltradingwellbelowtheirpriorpeaks onbothEV/RevenueandEV/EBITDA.Ofnote,thesedeclinescontinuetobelargelyafunctionoffallingenterprisevaluesasopposedto operationaldeficienciesontherevenueorEBITDAfronts.ThisactivityisechoedbythepublicSaaSmarketmorebroadly,whererevenue multipleshavefallenfurthertoaround4x¹,downfromover7xinearly2025.Theindustrycontinuestofacesignificantheadwindsdriven inpartbythreekeyfactors:asofterhiringenvironmentweighingonTalentAcquisitionnames,customerscuttingandconsolidatingtheir softwarestacks,andmountingconcernsthatAIagentswillpressureseat-basedlicensingmodelsovertime.

Sep-23Dec-23Mar-24Jun-24Sep-24Dec-24Mar-25Jun-25Sep-25Dec-25Mar-26

CoreHRTalentAcquisitionTalentManagement

One-YearHistoricalIndexPerformance

WhilebothTalentAcquisitionandCoreHRoutperformedtheS&P500inthefirsthalfof2025,thattrendhasnotcontinuedinto2026.All threeoftheHCMindexeshaveremainedunderpressureheadingintoQ12026,withTalentAcquisitiondown19%,CoreHRdown38%, andTalentManagementdown39%.

HCMPublicTradingStatistics

HCMAcquisitions

DealDate

CompanyName

OrgChartJan2026

PenguinDataJan2026

MoaviJan2026

PeoplesafeJan2026

Jan2026

EthanAllenHRServices

SalaryTransparentStreetJan2026

CoreHR

Acquirer

ResurgensTechnology

ValsoftCorporation

LGLugardeGente

SummaEquity

G&APartners

NowThis

Remote AtlasJan2026

BoundlessJan2026

HRlabJan2026

Payoneer

TheHoldingClub

n/mn/mn/mn/mn/m

EqualityCheckJan2026

Talentech GradeJan2026 n/mn/mn/mn/mn/m

CrewzoneJan2026

MaisMeiFeb2026

HelloBonnieFeb2026

StaffReadyFeb2026

Visma

Rentman

Visma

Hrmony

ExaCapital

WestViewCapital BenefitsAllInFeb2026

4CRisk.aiFeb2026

HarborComplianceFeb2026

Paie&RHSolutionsFeb2026

TotalmobileFeb2026

HRSoftMar2026

WayRollHRMar2026

HRPalsMar2026

CUBE

BregalSagemount

SDWorxGroup

SolvaresFSM

GryphonInvestors

PremierPayrollSolutions

Allvia

n/mn/mn/mn/mn/m

HCMAcquisitions

CompanyName DealDate

IncludedAIJan2026

TalentManagement

Acquirer

Phenom

Docebo

n/mn/mn/mn/mn/m

AssemblyJan2026

365TalentsJan2026 n/mn/mn/mn/mn/m

StackFuelJan2026

WellbeingPolskaJan2026

QuantumWorkplace

Multiverse

MavieWork

Phenom

n/mn/mn/mn/mn/m

RehvUpTechnologiesFeb2026

BeAppliedFeb2026 n/mn/mn/mn/mn/m

LyceumFeb2026

EvergreenCSDMar2026

EerlyAI

Perceptyx

LPMMediaGroup

n/mn/mn/mn/mn/m

TicTacLearn DistrisoftMar2026

eTip ShinyMar2026 n/mn/mn/mn/mn/m

TalentAcquisition

ScreenloopJan2026

JobApplications.comJan2026

DistroJan2026

Equitas

Employers.io

VensureEmployerSolutions

Andela WovenJan2026

HireflyJan2026

HumanizFeb2026

Wellfound

LPTApertureHoldings

OnGrid ReczeeFeb2026

Viventium ApploiFeb2026

HonestJobsFeb2026

InternshalaMar2026

BrainsFirstMar2026

WeCPMar2026

HireguideMar2026

TalentioMar2026

GliderAIMar2026

Orijin

n/mn/mn/mn/mn/m

n/mn/mn/mn/mn/m upGrad

TMA(MainCapitalPartners)

InvisibleTechnologies

HireVue

Jinjer(J-Star)

Findem

Adzuna TrovitMar2026

InterviewDeskMar2026

TeziMar2026

OptimindPharma

Headway

n/mn/mn/mn/mn/m

HCMFinancingSummary

Thematerialinthisreportisforinformationpurposesonlyandisnotintendedtoberelieduponas financial,accounting,tax,legalorotherprofessionaladvice.Thisreportdoesnotconstituteandshould notbeconstruedassolicitingorofferinganyinvestmentorothertransaction,identifyingsecuritiesfor youtopurchaseoroffertopurchase,orrecommendingtheacquisitionordispositionofanyinvestment. HarborViewAdvisorsdoesnotguaranteetheaccuracyorreliabilityofanydataprovidedfromthirdparty resources.Althoughweendeavortoprovideaccurateinformationfromthirdpartysources,therecanbe noguaranteethatsuchinformationisaccurateasofthedateitisreceivedorthatitwillcontinuetobe accurateinthefuture.