Paychex Bets on Temporary Staffing Growth

The acquisition of Advance Partners will allow Paychex to provide additional support to its staffing industry clients.
Katie Kuehner-HebertDecember 2, 2015

Payroll services provider Paychex said Wednesday it had agreed to acquire Advance Partners in a bet on growth in the temporary staffing industry.

Advance Partners works with more than 7,500 temp agencies, offering services including payroll funding, invoicing and tax preparation. Terms of the deal were not disclosed.

According to a news release announcing the merger, there are more than three million temporary employees in the United States, with about 10,000 small and mid-sized staffing businesses providing support for them.

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“The staffing outsourcing business is a growing industry that serves many small and mid-sized firms, which is a perfect fit for Paychex,” the company’s president and chief executive Martin Mucci said.

“We believe the temporary staffing business is going to continue to grow, due in part to ever-increasing government regulation, including the Affordable Care Act and newly proposed overtime rules,” he added.

A number of staffing companies are already among Paychex’s nearly 600,000 clients. “This acquisition will allow us to offer them more services and support,” Mucci said.

Advance Partners CEO Joel Adelman said the merger will enable the company to “leverage the capital, technology, and insurance resources of a leading provider of human capital management solutions to offer our clients a more complete suite of services to further accelerate their growth.”

Paychex stock fell slightly in trading Wednesday, closing at $53.91. For the first quarter, the company reported total service revenue rose 8% to $712.2 million, while net income increased 22% to $209.1 million.