Paychex in Advanced Talks to Acquire Paycor in $3.3 Billion Deal

Paychex Inc., a leading payroll and human resources services provider, is in advanced talks to acquire Paycor HCM Inc., a smaller rival in the payroll processing industry, according to sources familiar with the matter. The deal, which could be announced as early as this week, would bring together two major players in the fragmented human-resources software and services market.

Paycor, based in Cincinnati, Ohio, had a market value of $3.3 billion as of Friday’s close, while Paychex, headquartered in Rochester, New York, boasts a market capitalization of over $50 billion. The acquisition would mark Paychex’s largest deal to date, expanding its footprint in the payroll and HR services sector.

Neither Paychex nor Paycor responded to requests for comment outside regular business hours. Sources emphasized that the talks are ongoing and could still fall apart, as no final agreement has been reached.

The potential acquisition reflects a broader trend of consolidation in the HR and payroll services industry. Earlier in October 2024, Automatic Data Processing Inc. (ADP), the dominant player in the market, agreed to acquire WorkForce Software, a company specializing in bespoke compensation management. Paycor, which serves over 30,000 small and medium-sized businesses across the U.S., offers cloud-based software to automate payroll and human-capital management.

Paycor’s largest shareholder is an entity controlled by private equity firm Apax Partners, which declined to comment on the potential deal. Paychex, which serves more than 745,000 customers in the U.S. and Europe, provides a range of services, including payroll, employee benefits, and insurance.

The acquisition would allow Paychex to bundle more services for its customers, potentially leading to cost savings and increased efficiency. The deal also highlights the growing demand for integrated HR and payroll solutions as businesses seek to streamline operations and manage workforce needs more effectively.