Cornerstone OnDemand Acquires Sonar6

Cornerstone OnDemand, a SaaS Talent Management vendor who went public last year, announced its first post-IPO acquisition. Cornerstone acquired Sonar6, a small New Zealand-based firm that provides SaaS solutions to measure staff performance and helps build out the Cornerstone offering, specifically accelerating Cornerstone’s strategy to penetrate the small business market.

The HCM software market continues to consolidate at a rapid pace as this deal comes on the heals of the SAP/SuccessFactors deal and the Oracle/Taleo deal. Cornerstone is positioning themselves as one of the clear stand alone leaders in the Talent Management space. Cornerstone trades at 12x+ revenue and our estimates are that the Sonar6 deal was priced at about half that which is still a great exit multiple for a sub-scale SaaS business. We expect more deal activity in the HCM market but with Oracle and SAP having already made their moves we expect a larger number of smaller deals. That is until Microsoft decides to join the party.