- Massachusetts-based Kronos and Florida-based Ultimate Software will soon merge, the pair announced Feb. 20. The two organizations have a combined 12,000 employees globally and around $3 billion in annual revenue, with a total valuation of $22 billion; they also plan to hire 3,000 new employees during the next three years, according to the announcement. The two companies’ boards of directors unanimously approved the all-stock merger, which is expected to close in March.
- Leaders at Kronos and Ultimate, both multi-year winners of Glassdoor and Fortune best places to work honors, said they expect the merger will position the new combined company to “have enhanced scale and an even stronger position in the fast-growing HCM marketplace.”
- The new company will be led by Kronos CEO Aron Ain, who has been in that role since 2005 and with the company for 40 years. Both companies are owned by private equity firm Hellman & Friedman. The firm bought Kronos in 2007 and took the company private. Last year, the same PE firm bought Ultimate Software with an investor group that includes Blackstone, the well-known investment firm whose private equity funds will be the largest minority owner of the new combined company.
Ultimate and Kronos are prominent companies in the human capital management (HCM) software space, with overlapping offerings for areas such as time management, employee scheduling, onboarding, payroll, workforce analytics, and more.
This merger represents a notable consolidation in that market, which is dominated by ADP, SAP, Workday, Microsoft, and Oracle, with other medium-sized enterprises and emerging contenders.
Researchers and industry experts have predicted rapid growth for technology in HR. With people management and retention becoming C-suite issues, companies of all types are offering enterprise solutions for human resources management. While ADP, SAP and Oracle have historically been leaders in this space, newcomers such as Workday and consumer technology giants like Facebook, Google and Microsoft have entered this sector as well.
In the merger announcement, a representative of the investor group made clear that Kronos and Ultimate are combining in hopes of adding a formidable competitor to this increasingly crowded field.
Given the increasing role of technology in people management, experts have advised HR leaders to build stronger relationships with their IT counterparts. A recent report from iCIMS, for example, recommended HR and IT leaders work together to determine their companies’ workforce data needs and build a strategy incorporating analytics, administration, employee workflow and talent acquisition.