Immedis considering acquisition next year as it expands global payroll platform, CEO says

February 2, 2021
4 mins read

– Originally published on Mergermarket

by Kyle LaHucik in Chicago  

Immedis, a global payroll technology provider, could be acquisitive next year as it beefs up its payroll platform, said CEO Ruairi Kelleher.    

Dublin-based Immedis has been in discussions with a potential target since July, and if the deal were to come to fruition, it would likely happen next year, Kelleher said. Immedis would consider complementary technologies to its core global managed payroll platform, the CEO said.  

This includes data ingestion tools and employee insights, among other areas, Kelleher said. Potential geographies for acquisitions include Germany, France and Brazil to bolster critical mass there, the executive added. Immedis acquired a US-based firm, Expaticore, for USD 10m in 2017 “to give us basically market presence as much as anything else,” the CEO said.

Immedis processes payroll for customers such as Uber [NYSE:UBER] and ServiceNow [NYSE:NOW] in more than 150 countries. The company’s core customers are in big technology, financial services and big pharma, Kelleher said. Other customers include medical technology companies, universities and engineering firms, he added. 

Immedis has about 250,000 people logging into the platform every month and has grown at a compounded rate of about 70% year-over-year since 2017, Kelleher said. The company will look at a similar growth rate next year, the CEO added, declining to disclose current financials.    

Kelleher’s goal is to drive Immedis to EUR 150m to EUR 200m in recurring revenue in the next four years and to reach profitability within the next 24 months, the CEO said.   

At that point, Immedis will consider various routes. “From a public perspective, it’s quite an attractive organization to have as a public company just because of the profile of the forecastability of revenue. It certainly is one option,” Kelleher said.    

Immedis competes against Roseland, New Jersey-based ADP [NASDAQ:ADP] and Hemel Hempstead, England-based NGA Human Resources, Kelleher said. Last November, Lincolnshire, Illinois-based AlightSolutions closed its acquisition of NGA for undisclosed terms. Alight, backed by the Blackstone Group [NYSE:BX], previously postponed its initial public offering in March 2019.    

Last week, Immedis announced a USD 50m (EUR 41m) strategic investment from Lead Edge Capital at a valuation of USD 575m (EUR 473m). The company previously secured EUR 25m from Scottish Equity Partners in June 2019. Both investors own minority stakes, with founder Terry Clune of Clune Technology Group remaining the majority owner.   

Kelleher said Immedis did not require the additional capital but decided to move forward to double down on the fast-growing payroll consolidation space. Proceeds will fund office expansion on the US West Coast and Singapore, in addition to hiring. The 270-employee will nearly double in headcount next year, the CEO said.    

“The ability to actually consolidate payroll through a platform didn’t exist until really the consolidation of the human capital management (HCM) market, with the likes of Workday [NASDAQ:WDAY], Ceridian [NYSE:CDAY], Ultimate Software and SuccessFactors,” Kelleher said. “Prior to that, payroll was a very local industry.”   

In May, Ceridian reached a deal to acquire Singapore-based Excelity Global Solutions, a payroll platform in the APAC region, from sponsor Everstone Group for undisclosed terms. In June, Workday CFO Robynne Sisco said at a William Blair conference the enterprise HR company is “constantly scanning the landscape” for potential M&A opportunities. In February, Ultimate Software and Kronos agreed to merge, with Hellman & Friedman as controlling shareholder, with an enterprise value of USD 22bn.   

Immedis originally started as the Taxback Group in 1996 as a global mobility technology firm working with corporates to manage oversea tax obligations for their expat workers, Kelleher said. The company rebranded to Immedis and shifted its focus to global payroll in 2016.    

A&L Goodbody advised on the Lead Edge investment. PWC is the company’s auditor.