Payroll
Intuit to Acquire PayCycle
Companies Joining Forces to Provide new Online Payroll Offerings to Small Businesses, Accountants and Financial Institutions
Jun. 02, 2009
From Press Release:
MOUNTAIN VIEW, Calif.– Intuit Inc. (Nasdaq: INTU) has signed a definitive
agreement to purchase PayCycle Inc., one of the nation’s fastest-growing
online payroll services, serving more than 85,000 small businesses. The cash
transaction is valued at approximately $170 million, subject to adjustment.
Privately held PayCycle, based in Palo Alto, Calif., is a leader in online payroll
for small businesses, accountants and financial institutions.
The acquisition will give small businesses access to one of the most innovative,
easy-to-use and cost-effective online payroll solutions from one of the strongest
and most trusted brands in financial management software. In addition, it will
provide hundreds of thousands of accountants with the ability to easily and
profitably offer services as stand-alone payroll providers for their small business
customers.
Customer Value
“We’ll offer small businesses a range of low-cost, high-value
alternatives to expensive payroll outsourcers and time-consuming, error-prone
manual payroll methods,” said Nora Denzel, senior vice president and general
manager of Intuit Employee Management Solutions. “In addition, the acquisition
will enable Intuit to develop and deploy the next generation of online payroll
tools more quickly.”
PayCycle chief executive Jim Heeger, a former Intuit chief financial officer,
said the two companies’ strengths complement each other.
“We share a common vision: using the Internet to deliver a secure and
easy-to-use payroll solution to small businesses,” said Heeger. “Like
Intuit, our employees are proven innovators and industry thought-leaders who
develop and deliver game-changing offerings that redefine traditional ways of
doing things.”
Strategic Importance
The acquisition supports Intuit’s strategic goals in two ways.
First, it underscores the company’s connected services strategy, which
is designed to give customers online access to its products and services. Today,
Intuit derives more than half its total revenue from connected services offerings.
Expanding the online capability of its payroll offering advances Intuit’s
move into the “software as a service” markets for small business.
As a result, the company expects to accelerate the growth rate of its overall
payroll business.
In addition, PayCycle’s partnerships with financial institutions are
expected to extend Intuit’s ability to offer integrated payroll solutions
to an even larger set of partners and deliver a simple payroll solution to a
greater number of small businesses.
Terms and Conditions
The transaction is expected to close during the third quarter of calendar
year 2009 and is subject to regulatory review and other customary closing conditions.
Intuit expects the acquisition to reduce its GAAP earnings by approximately
2 cents per share in the fourth quarter of fiscal year 2009. Intuit does not
expect the acquisition to have a material effect on fiscal year 2010 earnings.
After the transaction is complete, PayCycle will become part of Intuit’s small
business group. PayCycle CEO Heeger will serve as a strategic advisor to Intuit
for six months to help ensure a smooth integration of the two companies.
About Intuit Inc.
Intuit Inc. is a leading provider of business and financial management
solutions for small and mid-sized businesses; financial institutions, including
banks and credit unions; consumers and accounting professionals. Its flagship
products and services, including QuickBooks, Quicken and TurboTax, simplify
small business management and payroll processing, personal finance, and tax
preparation and filing. ProSeries and Lacerte are Intuit’s leading tax preparation
offerings for professional accountants. The company’s financial institutions
division, anchored by Digital Insight, provides on-demand banking services to
help banks and credit unions serve businesses and consumers with innovative
solutions.
Founded in 1983, Intuit had annual revenue of $3.1 billion in its fiscal year
2008. The company has approximately 8,000 employees with major offices in the
United States, Canada, the United Kingdom, India and other locations. More information
can be found at www.intuit.com.
About PayCycle
PayCycle is America’s No. 1 online payroll service, serving more than 85,000
small businesses. PayCycle provides an easy-to-use, innovative, efficient service
for small businesses, backed by outstanding customer support. PayCycle also
powers payroll services for leading financial institutions including Capital
One and PNC Bank, and provides client payroll services through many of the nation’s
accounting professionals. The PayCycle service integrates with leading accounting
programs, such as QuickBooks, Quicken, Peachtree and Microsoft Money. PayCycle’s
unique “Do-It-With-YouSM” (DIWYSM) technology platform guides customers
through the entire payroll process from paycheck to W-2 forms. PayCycle also
holds PC Magazine’s highest editorial honor for small business payroll, the
PC Magazine Editors’ Choice Award. Visit www.paycycle.com for a free trial of
the service.