Friday, November 26, 2010

MasterTax, LLC - ADP Acquisition (Yes, yester-month's news)

Better late than never... I thought a splash of information on the acquisition of MasterTax by ADP in October might be in order.

Cynical thoughts....  It couldn't be more annoying to be an independent payroll service bureau who has been fighting off the ADP reps for years to end up standing naked in front of the enemy, pardon, 'worthy competition', as their client list is potentially thrown across the battlefield by an ally.  As you can see in PTM's published reaction to this acquisition, they anticipated an influx of Payroll Service Bureaus moving onto their tax management service as a result of this sale.

MasterTax has provided a great service for folks for many years, and I wish them well.  The part that might frighten an independent bureau is reflected in this statement from ADP's press release, “We look forward to leveraging our combined expertise in tax and compliance services, as well as introducing MasterTax’s clients to ADP’s broad offering of proven solutions.


It is a huge annoyance for a payroll service bureau to switch from one outsourced tax service to another - expensive too.  If I were in their shoes, I would make a call to ADP and ask them if they plan to offer their payroll services to my client list gleaned from MasterTax's records... and get it in writing.

Thursday, November 25, 2010

Happy Thanksgiving to All!

Let us remember that, as much has been given us, much will be expected from us, and that true homage comes from the heart as well as from the lips, and shows itself in deeds.  

~Theodore Roosevelt

Saturday, November 20, 2010

Perquest / ADP Comment Storm

As any politician knows, an information vacuum wants to be filled.  It is up to you to fill it with your own spin before the opponents do.  So it is with the information flow on the Perquest closure and client sale to ADP.

Now, I'm sure that there are a number of non-disclosures, etc. that are holding back the folks in the know from speaking to the event publicly, but a variety of points of view have been aired within the 40 plus comments that have been posted in response to my initial note on the topic.

Should any former principals of Perquest wish to post a response, I would gladly give them a forum here.

Thursday, November 11, 2010

Choosing a Payroll Service - Avoiding the Acquisition Bulls-Eye

In light of the recent acquisition of Perquest's client base by ADP (not an uncommon activity by them), the thought came to my mind that many small to mid-sized businesses may not be aware of what the 'Acquisition Target' warning signs are before they make a move to a new payroll service.

As their 'new' payroll service brings them on-board, it is typically a move off of ADP or Paychex and toward a smaller, more customer-centric service, which is great.

Downside?  When the 'Acquisition Target' payroll service bureau sells - the payroll clients go right back to the service they left, and ADP is the most likely company to be doing the acquiring.

This generally puts a sour look on the average business owner's face.

So, what are the warning signs that your new, smaller, friendlier payroll service may have a secret 'For Sale' sign taped to the back of their door?

Three Core Points:
#1 Investors Own the Company
#2 Previous History of Acquisitions in C-Level folks' Resume
#3 Abnormally Rapid Growth

To Point #1:  If investors own the company, they are likely in it to turn & burn the investment.  Once they see a tidy profit to be made (or - in the case of Perquest, a big loss to avoid), they are out - and so are you.

To Point #2:  If the management team has had previous history of their companies being acquired, it has to be very tempting to build the business specifically as a target for acquisition.

to Point #3:  Building on #2, if the management team is tempted - they may throw away money, acquiring clients by using deep discounts.  This bloats up the numbers, but the clients who got a deal may not feel so good about it when they are sold to ADP.

So, as a business owner, here are a couple of questions to get you started as you avoid a potential return to ADP or Paychex:
  • "I love your solution for my business' payroll and HR needs.  Can you tell me about your company's history?"
  • "How many clients do you have?"
  • "How many new clients do you bring aboard each year?"
    As always, moving your payroll to a new service can have many implications, including tax related issues.  Get as much detail as you can about the transition process, and don't be afraid to ask pointed questions.  If they don't have answers (or can't make a quick phone call to find out) - keep shopping.

    Saturday, November 6, 2010

    Valiant Acquires Triton HR Payroll Processing Customer Base

    Valiant Acquires Triton HR Payroll Processing Customer Base and Expands Market Coverage with a Triton HR Independent Representative Agreement.

    Thursday, November 4, 2010

    Perquest sells to ADP?

    We will see what shakes out, but it looks like Perquest has sold to ADP, and locked the doors to numerous regional sales offices...