Deal to Close in the Next 30-60 Days, Subject to Regulatory Approval
HR and payroll software company Paylocity has agreed to acquire corporate spend startup Airbase for a total consideration of $325 million. The deal is expected to close within the first or second quarter of Paylocity’s fiscal year, pending regulatory approval.
Acquisition Funding Comes from Paylocity’s Revolving Credit Facility
The acquisition is being funded by borrowings under Paylocity’s revolving credit facility. This marks a significant investment for Paylocity, which has a current market capitalization of just under $9 billion and serves approximately 40,000 customers.
Airbase: A Fintech Company with a Valuation of $600 Million in 2021
Airbase, founded by Thejo Kote in 2017, was valued at $600 million post-money in 2021. The company had raised just over $100 million in equity funding since its inception from investors such as Menlo Ventures, Bain Capital, and First Round Capital.
Airbase’s Platform and Services
Airbase’s platform includes bill payments, corporate cards, employee reimbursements, and other features aimed at helping mid-sized companies better manage their spending. The company has competed with the likes of Ramp and Brex in the fintech space.
Kote on the Acquisition: A "Fantastic Opportunity" for Airbase
Thejo Kote, founder of Airbase, stated that while the decision to sell was not easy, it made sense in the end. He highlighted the opportunity to create a unified HCM (human capital management) and finance platform for mid-market companies, leveraging Paylocity’s size and scale.
Structured Deal Leaves Cash on Airbase’s Balance Sheet with Shareholders and Employees
According to a source familiar with the deal, the structured deal does not include all of the cash on Airbase’s balance sheet. Including this cash, the entire value of the deal is actually around $400 million.
Airbase’s Employee Count: Just Over 300
Airbase has just over 300 employees. It remains to be seen how many will be joining Paylocity following the acquisition.
Not Kote’s First Exit: Sold Automatic to SiriusXM in 2017
Thejo Kote is not new to exits, having sold his previous company, Automatic, to SiriusXM for over $100 million in 2017.
Paylocity and Airbase: A Match Made in Heaven?
This acquisition marks a strategic move by Paylocity to expand its total addressable market beyond human capital management (HCM) and further into the office of the CFO. With a strong presence in the mid-market space, Airbase’s platform will likely complement Paylocity’s existing offerings.
Conclusion
The acquisition of Airbase by Paylocity is a significant development in the fintech space. As both companies continue to grow and expand their services, it remains to be seen how this partnership will shape the industry landscape.
About Paylocity
- Headquartered in Schaumburg, Illinois
- Publicly traded with a current market capitalization of just under $9 billion
- Approximately 40,000 customers
About Airbase
- Founded by Thejo Kote in 2017
- Valued at $600 million post-money in 2021
- Just over 300 employees