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In the latest sign of the growing influence of artificial intelligence in the HR industry, Paychex announced on Tuesday that will acquire payroll processing company Paycor HCM for about $4.1 billion in cash. Analysts see the transaction as part of an effort by Paychex to broaden its AI capabilities and consolidate market share.
“I’m excited to welcome Paycor to the Paychex family,” said John Gibson, president and CEO of Paychex. “For over 50 years, Paychex has been committed to helping businesses succeed. This acquisition represents a significant milestone in our journey to provide best-in-class human capital management solutions to businesses of all sizes.”
Paycor CEO Raul Villar Jr. agreed.
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“We believe this transaction will create a great outcome for our clients and key stakeholders, and we are very excited to be joining Paychex for the next phase of our journey,” he said. “We are confident that our customers will benefit from the shared expertise, resources and innovative human capital management solutions of both companies to drive even greater people and business performance."
Paychex, based in Rochester, N.Y., is a provider of integrated human capital management solutions for HR, payroll, benefits and insurance for small- to medium-sized businesses in the United States and parts of Europe. Paycor, which has its headquarters in Cincinnati, provides payroll, HR services, talent acquisition, talent management, workforce management, benefits administration, reporting and analytics, and other payroll-related solutions. Its services generally are provided in a Software-as-a-Service delivery model, using a cloud-based platform.
Paychex officials told investors in a conference call to expect $80 million in cost savings from the merger of the two companies. They offered no details on whether jobs will be lost from these cost savings but stressed that the deal should lead to overall job growth.
“The acquisition of Paycor is highly complementary,” Gibson said. “It will enhance our capabilities upmarket, broaden our suite of AI-driven HR technology capabilities and provide new channels for sustained long-term growth. Our customers will benefit from an expanded suite of technology and advisory solutions designed to help them address their HR challenges. Paycor’s customers will benefit from our broad product set of HR advisory and employee solutions and from the scale and tradition of operational and service excellence that Paychex is well-known for in the marketplace.”
The deal reflects a broader consolidation trend in the payroll and HR industry. In October, payroll firm Automatic Data Processing acquired management services provider WorkForce Software for around $1.2 billion in cash.
The deal, expected to close in the first half of 2025, has been approved by both companies, as well as private equity firm Apax partners and its affiliates, which currently own the majority of Paycor’s outstanding shares. Paycor has a high profile in its hometown where it employs around 2,900 employees and owns the naming rights to the stadium in which the NFL’s Cincinnati Bengals play.
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Alan Goforth
Alan Goforth is a freelance writer in suburban Kansas City. In addition to freelancing for several publications, he has written a dozen books about sports and other topics.
