Paycircle acquired by Access Group

UK business management software provider Access Group acquired cloud-based payroll software platform Paycircle for an undisclosed sum in 2022. CapEQ advised the shareholders of Paycircle.

Overview

Access People, a division of leading business management software provider Access Group, has acquired Paycircle – a cloud-based collaborative payroll platform for modern payroll bureaus. Paycircle’s expertise in payroll management will integrate into Access People’s core suite, boosting current payroll offers for new and existing customers.

Paycircle is a UK payroll platform provider with over 20 years’ experience building financial software and compliance platforms. Its cloud-based payroll ecosystem is exclusively distributed through the bureau and accountancy channels designed to accelerate payroll efficiency.

The problems (challenge)

The Paycircle shareholders appointed CapEQ in April 2021 after receiving several unexpected approaches from potential acquirers. Our role was initially to field the enquiries and help the team refine KPIs.

The Paycircle shareholders appointed CapEQ in April 2021 after receiving several unexpected approaches from potential acquirers. Our role was initially to field the enquiries and help the team refine KPIs.

At just five years old, Ascot-based Paycircle was known in the payroll software market as a disrupter. While most payroll bureau software built with legacy technology, Paycircle was the first genuine cloud-based system.

Rapid growth trajectory created financing challenges for Paycircle, and with very low churn rates, shareholder focus centred on ARR as they worked with CapEQ to get the business ready for sale.

Access Group is an experienced acquirer, and its in-house M&A team had singled out Paycircle as a potential reseller. However, after a product demo, conversations turned into an acquisition offer.

CapEQ partner Douglas Edmunds mediated negotiations, while preparing for a full market approach in case talks stalled.

“We had already engaged with CapEQ before we got an unexpected offer. You helped us through the whole process of negotiating the offer, and held our hand through due diligence and the sale process.

You introduced us to other brilliant professionals, coached us and mentored us, handled all our emotions. We wouldn’t have been able to do this without you – you guys made it happen.”

Cat Pinkney

Founder Paycircle (sold Oct 2022)

James nursed me through the whole process, and even after the sale completed, he was still interested and helped to resolve issues that had arisen. All things considered, I would thoroughly recommend James, who steered the project to a very successful conclusion.

John Hinks, Droitwich Pharmacy (UK)

Doug’s ability to navigate the turmoil of a business sale with consummate calm and to instantly identify creative ways round every single barrier is second to none. His personable and gentle nature, combined with his insight and knowledgeability, helps him to earn trust, gain respect and build a solid rapport with every stakeholder in the process.

Alicia Pearlstone, PCM Healthcare (UK)

The solution

The shareholders had a nice dilemma – to stay on, ride the growth trajectory, and start getting back what they had put into Paycircle. Or to exit now, restore their work/life balance, and let a bigger entity take the platform forward.

Therefore, an acceptable offer would have to compensate for the earnings the shareholders would miss out on over the next 2-3 years, and pay off what they had already put into the business. 

Access’ initial offer came in, but was rejected. Two days later, an improved offer was tabled, though with a significant deferred earnout, the shareholders were nervous about post-merger integration issues diluting their earnout.   After further negotiation, the parties settled on an undisclosed sum at 85% upfront and 15% deferred over two years upon hitting ARR targets.

The due diligence phases saw rigorous testing of the open source platform and 16 meetings with Access, as well as clarification and reassurance over tax and intellectual property. The acquisition process completed 18 months after CapEQ was appointed.

The result

20: Company acquisitions by Access in 2022

£685million: Company acquisitions by Access in 2022

14: Paycircle headcount

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