Software company Sage acquired the US-based payroll services group PayChoice because of their services rather than their location according to a spokesperson for the company.
The deal, announced today and paid in cash, amounted to nearly £100m ($157.8m) and the source believes that was a result of PayChoice’s particular services, such as fully established payroll, HR and compliance offices, rather than, according to the press release, strengthening Sage’s position in the growing US market.
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The spokesperson also believed the services group was acquired for a ‘fair price’, especially considering its ‘recurring revenue’, and talks had been ‘ongoing for a while’. PayChoice saw revenues of $38.9m in 2013 and has 100,000 customers in the United States that use subscription services.
This business could aid Sage in meeting its target of 6% organic growth by 2015. In its last midyear results, organic growth was below 5% compared with the first half of 2013 and sales declined by 7% to £657m.
Pascal Houillon, CEO of Sage North America, said: "PayChoice is an excellent business, with a strong management team, attractive cloud platform and a proven business model based on supporting the needs of small and medium-sized businesses and licensees. We are excited about the growth opportunity that the combination of Sage and PayChoice creates in this market and delighted to welcome the management and staff of PayChoice to Sage."
Sage currently has over 6m customers and 12,700 employees over 24 countries. In July, the group announced the acquisition of another payroll business, Germany-based company Exact Holding N.V., for 16.25m ($20.8m).
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