National PEO provider Gevity of Bradenton, FL said has acquired Charlotte, NC-based HRAmerica, a mid-market HRO provider, for $10 million in cash, The purchase gives Gevity a scalable technology to enhance its non-coemployment model, Gevity Edge Select. HRAmerica offers fundamental employee administration solutions such as payroll processing and manager self-service to approximately 75 clients and 16,000 employees.
“HRAmerica’s robust and scalable engine provides a foundation with which we can support growth in Gevity Edge Select. In this non co-employed environment, we will broaden our target market while improving the quality and predictability of our earnings,” commented Erik Vonk, Gevity’s chairman and CEO. “While the client portfolio of HRAmerica fits the profile of those businesses who could benefit from Gevity’s broader comprehensive offering, the key reason for the transaction is to acquire the processes and technology to support our growth.”
“HRAmerica has enjoyed substantial growth since being founded in 1998. The integration of our technology into the Gevity Edge Select model will provide a compelling case for even greater expansion into the small and middle market,” added Heath Byrd, HRAmerica’s COO. “Gevity’s sound infrastructure and dynamic operations will provide HRAmerica’s clients and employees with the exceptional support they have come to expect.”
This cash transaction, valued at approximately $10 million, is expected to be non-dilutive to Gevity’s 2007 results. The purchase price includes a payment of $0.5 million for a small number of coemployed HRAmerica clients, which is subject to state regulatory approval.
The purchase further reinforces Gevity’s efforts to tap the mid-market, a market segment that is seen as the fastest growing in HRO today. The company has a few mid-market clients, including office imaging giant Danka, which signed on in 2005. Since then, Gevity has increasingly tried to grow its mid-market portfolio.