Enterprise HRO market leader Hewitt Associates will sell its Cyborg payroll business which it had acquired five years ago, to Vista Equity Partners, a private equity firm focused on investing in software and technology companies. Terms of the transaction were not disclosed.
The transaction is expected to close during the company’s fiscal second quarter.
“The acquisition of Cyborg in 2003 allowed Hewitt to gain some important experience in the payroll domain at a time when we needed to complete our suite of HR outsourcing services,” said Russ Fradin, chairman and CEO of Hewitt Associates. “Going forward, end-to-end payroll services will continue to be a strategic element of our HR outsourcing offer as we build on the expertise gained from the acquisition and use it to continuously improve our comprehensive payroll solution for our large HR BPO clients.”
Currently, Hewitt’s Cyborg business provides licensed, processed, and hosted payroll software services to a number of organizations in the U.S., Canada, and the UK. Vista plans to maintain this organization as a cohesive, self-sustaining business. The new company will be singularly focused on delivering payroll and human resources management software and processing solutions. Hewitt will retain and continue to provide payroll services for its HR BPO clients and will continue to license the company’s software as the core platform for those clients and for certain Hewitt internal operations.
“With this divestiture, we’re taking an important step to streamline our HR outsourcing offer,” said Jay Rising, president of Hewitt’s HR outsourcing business. “Licensing software is not core to strategy of providing end-to-end benefits, payroll, and workforce management services. The sale will enable Vista, an organization focused on software and technology-related businesses, to manage and grow this business for the benefit of Cyborg clients, while still providing a platform for Hewitt to continue delivering managed payroll services for some of our large, multi-process HR outsourcing clients, as well as for ourselves.”
Robert F. Smith, managing principal of Vista Equity Partners, said of the firm’s intent: "We are long-term investors in technology-enabled companies that are committed to being leaders in their markets. We are impressed with the product offerings and the track record of customer service and support that Cyborg provides their clients. We are also excited that this new business will maintain a strong relationship with Hewitt in providing the core platform for their managed payroll clients, thus ensuring consistency with their shared customers.”