Paylocity to Acquire Airbase in $325 Million Deal

HR and payroll software solutions provider Paylocity has struck a deal to acquire spend management platform Airbase for $325 million, the companies said in a media release on Sept. 4.

The transaction is subject to customary closing conditions and regulatory approvals, and it’s expected to close in the first or second quarter of fiscal 2025. The deal is being funded by borrowings under Paylocity’s revolving credit facility.

The integration of Airbase’s finance solutions with Paylocity’s human capital management (HCM) platform is expected to provide companies the ability to see payroll and non-payroll spend in real time, leading to a faster financial close, improved planning, and stronger financial controls, Schaumburg, IL-based Paylocity said.

“I’m very excited about the acquisition of Airbase, which we believe will allow us to provide companies with an integrated software platform to manage all aspects of their operational spend,” Paylocity President and CEO Toby Williams said in a statement. “Many companies use disparate software solutions or manual processes to manage their labor costs and non-labor vendor and procurement spend, and we expect this acquisition will give us the ability to provide a comprehensive solution and modern client experience for managing all spend on a single integrated platform. Airbase represents an exciting opportunity to expand our relationship with our nearly 40,000 clients to offer an integrated software platform for running their business operations while also offering a very compelling value proposition for prospects across our target market.”

Founded in 2017, Airbase is headquartered in San Francisco and has approximately 300 employees in the U.S., Canada, India, and the Philippines. Its finance and spend management software solution is focused on the 100- to 5,000-employee segment of the market, with more than 500 clients with an average of over 200 employees.

In a post on LinkedIn on Wednesday, Airbase founder Thejo Kote said by joining forces with Paylocity, Airbase has an opportunity to “deliver a unified experience to manage 100% of the spending that happens in a business. I’m convinced that the breadth and depth of the combined offering will be unmatched in the industry.”

He continued, “As a founder, it’s never an easy choice to sell your business, especially when there isn’t any pressure to do so. But, I was ultimately convinced by the fantastic opportunity to create a unified HCM and finance platform for the mid-market—leveraging Paylocity’s size and scale (nearly 40K customers) to bring Airbase to a much larger audience.

“About seven years ago, I started writing the first lines of code for what is now the leading procure-to-pay platform for mid-market companies (as per G2 over many years),” he wrote. “We now support comprehensive workflows and process many billions of dollars in payments on behalf of our customers. I can’t wait to see those numbers grow over the coming years.

“As a second-time founder, I had learned to prioritize the journey over the outcome when I started working on Airbase,” Kote added. “I owe a huge debt of gratitude to the 300+ Airbase employees who have made it an incredible journey so far and deserve all the credit for this outcome.”

Airbase’s spend management platform includes the following key products and capabilities:

• Bill pay/accounts payable automation: Automated invoice processing and purchase order matching, routing for approval and payment via ACH, virtual card, check, or wire transfer.
• Expense management: Proactively request, approve, and reconcile expenses via web or mobile app with real-time reimbursements.
• Corporate cards: Provision and deprovision “smart” physical and virtual cards with pre-built spend controls and approval workflows.
• Procurement: Automated procurement processes and tracking to maximize efficiency with real-time visibility and control over procure-to-pay processes.
• Integration ecosystem: Robust set of integrations with key third-party systems, including core ERP/general ledger providers such as Oracle NetSuite, Sage Intacct, and QuickBooks.
• Workflow automation: Integrated and connected workflows across key spend and business process systems supported by a flexible and intuitive approvals engine.

Founded in 1997 and publicly traded since 2014, Paylocity offers an easy-to-use product suite that helps businesses automate and streamline HR and payroll processes, attract and retain talent, and build culture and connection with their employees.

As of June 30, 2024, Paylocity had $401.8 million of cash and cash equivalents on its balance sheet.