PayScale, a provider of SaaS-based compensation data and analytics and a portfolio company of Warburg Pincus, has been acquired by Francisco Partners at an enterprise value of $325 million.
PayScale is a provider of compensation software and data that is used by more than 8,000 customers – from small businesses to Fortune 500 companies – to make payroll decisions for more than 23 million employees. The company’s customers include Dish Network, Getty Images, Skullcandy, Time Warner, T-Mobile, Macy’s, Sunsweet, UnitedHealth Group, Stihl and Wendy’s. PayScale, led by CEO Mike Metzger, was founded in 2000 and is headquartered in Seattle, WA (www.payscale.com).
According to the company, PayScale has grown substantially in recent years as employees and employers alike increasingly demand modern compensation software that enables more data-driven compensation decisions, leading to greater pay transparency and equity. The company’s growth has also coincided with the emergence of social movements demanding greater gender and racial equality, as well as the increasing scrutiny organizations are under to make their business operations match their recruiting rhetoric.
“Compensation-related friction continues to affect employers and employees globally,” said Adam Solomon, a principal at Francisco Partners. “The changing dynamics of the workforce, including the shift from Boomers to Millennials as the dominant cohort in today’s workplace and the entrance of Gen Z, has made it impossible for CEOs to leave compensation to chance. PayScale helps bridge the disconnect by enabling its more than 8,000 customers to make compensation decisions that are more rooted in data and aligned to business goals than ever before. With this compelling value proposition, PayScale is well-positioned to capitalize on the large market opportunity ahead of the company.”
Francisco Partners makes investments in technology companies with transaction values ranging from $20 million to $2 billion. Transaction structures include buyouts, divisional divestitures, recapitalizations, restructurings, and growth equity financings. The firm is headquartered in San Francisco (www.franciscopartners.com).
Warburg Pincus, which acquired PayScale in April 2014, will be exiting its investment in PayScale through this transaction. “We are proud of PayScale’s significant growth over the past five years to become the leading cloud compensation data and SaaS provider in the space,” said Ashutosh Somani, a managing director at Warburg Pincus.
Warburg Pincus has more than $58 billion in assets under management and has raised 18 private equity funds since its founding in 1966. The firm is headquartered in New York with offices in Amsterdam, Beijing, Hong Kong, London, Luxembourg, Mumbai, Mauritius, San Francisco, São Paulo, Shanghai and Singapore (www.warburgpincus.com).
Raymond James & Associates (www.raymondjames.com) was the financial advisor to PayScale.
The transaction is expected to close within the next 15 days.
© 2019 Private Equity Professional | April 25, 2019