HireVue, a provider of video-interviewing and digital hiring solutions backed by Carlyle Group [NASDAQ:CG] since 2019, could be mature enough in two to three years to consider several exit options, said CEO Anthony Reynolds.
If the Salt Lake City, Utah-based company can maintain healthy growth and continue to demonstrate profitability, it would be well-positioned to consider either an IPO or a merger in a consolidating space, he said.
Reynolds joined as CEO in January, and the company has since made several executive hires, such as chief growth officer Patrick Morrissey, vice president of sales Fred Cartwright, and Damon Pal as head of Asia Pacific.
The company has more than 800 clients globally, ranging from small companies to large corporations, including Amazon [NASDAQ:AMZN], Unilever [LON:ULVR], Black Angus Steakhouses, and Atlanta Public Schools.
When HireVue sold to Carlyle in 2019, its EBITDA was reported at around USD 50m and its likely valuation was implied between 6x - 8x EBITDA, for a deal value as high as USD 400m, according to Buyouts. Reynolds said its EBITDA and deal value were higher than those figures but declined to otherwise comment on the report.
The company is approaching USD 100m in revenue, he said, noting it aims to roughly double in size over the next three or four years—in part by making acquisitions. In 2020, HireVue acquired California-based AllyO, which has an AI-driven chatbot to communicate with younger employee prospects via text and instant message.
It still has its eyes on both large and small acquisition targets, he said, noting it seeks people-related technology—especially in the video-interviewing segment, for which demand is growing nearly 50% annually.
Regarding possible suitors for Carlyle-backed HireVue, Mergermarket has previously reported that it could interest strategics like Monster.com and LinkedIn.
Reynolds noted large strategics in the digital human capital management space include Oracle [NYSE:ORCL], Workday [NASDAQ:WDAY] and SAP [NYSE:SAP].
When asked about IPO prospects for HireVue, Tricia Salinero, managing director and head of technology with Chicago-based investment bank and advisory firm Stout said: “We’ll need a lift in that sector before IPO consideration (for any HCM company)."
She pointed to publicly listed Ziprecruiter [NYSE:ZIP] and Workday, both of which are trading nearly 40% down versus one year ago.
Last month, Workday announced a USD 500m stock repurchase program—capital that it chose not to spend on acquisitions, noted Salinero.
As an alternative to an IPO or strategic sale, HireVue could also trade to another private equity firm as sponsors continue to look to deploy large amounts of capital on quality assets, Salinero said. Investments in the HCM and HR-tech space doubled in 2021, according to Stout data, she noted.
It is a good time to be a buyer in this sector, since assets in the digital HCM space are trading at a 30% to 40% discount compared to last year, said Jon Thomas, managing director at Stout. Last year, assets were fetching between 5x to 8x revenue, he noted.
Notable competitors for HireVue, Reynolds said, include Ohio-based Modern Hire, backed by PE firm Riverside Company, as well as Chicago-based Paradox and California-based Eightfold AI.
