Should Your PEO Add Accounting? Key Insights from G&A Partners & GrowthForce Acquisition

What happens when a PEO starts doing accounting work? That's what we're about to find out in a monumental recent acquisition. A large PEO has acquired a large accounting firm. This is a huge break from the norm in our industry, and I'm excited to break down this deal and what the implications are for the payroll and HR industry in this episode of Payrollin'. Welcome to Payrollin', the show where you will learn how to operate and grow your payroll business from the most dynamic minds in the business. If your company offers payroll services, this is the podcast for you. And now, here's your host, Matt Vaadi. Let's go! Welcome back to Payrollin'. My name is Matt Vaadi. Thank you so much for joining me today. I had to stop what I was doing, come in here, hit record as soon as I saw word of this deal come through. It's a huge deal, has massive implications for the future of the industry. Now, the fun thing is I did that last week when I originally read it, and I did a pretty lousy podcast, so I deleted it. Now I'm starting back over so we can have a little bit more time to research both companies, had a little bit more time to dive into the specifics of what's publicly available about them and this deal. Not a ton on the deal, but a lot on the companies. And I want to talk about what happened, what the potential impact is, and what we can do as payroll and HR service providers to either learn from this deal, position ourselves going forward, and ultimately set our bureaus up for success. So what happened? G&A, who is a large PEO— now I'm going to get into the definition of large here in just a minute because they do something that infuriates me, but we'll come back to that. They acquired a group called GrowthForce. So who is G&A? G&A Partners is a PEO with about 3,000 clients. They use the sketchiest method of reporting revenue I have ever seen for a PEO. I found them self-reporting in a fastest-growing businesses list that they are a $7.4 billion company. I've also seen them self-report that they have 3,000 customers. So if you do the math on that, they do $2.5 million in revenue per customer. Uh, no, that's not the way that works unless you're shady and you report all of your clients' wages and payroll as your revenue. Come on, man. That's so bush league to try to be a billion— say you're a multi-billion dollar company when you're literally counting the payroll of your clients and you're a CEO. Like, man, give me a break. Like, staffing companies are the comp here and I'll give it to staffing companies because at least reporting for employees that work at the staffing agency. They technically are W-2s of the staffing agency. These people are co-employed by the PEO, man. Like, not even ADP or Paychex or anybody else try to manipulate the numbers that way. For context, ADP's PEO reported $1.75 billion in revenue for 3 million worksite employees. I mean, obviously GNA doesn't have 3 million worksite employees for those 3,000 accounts. So interesting method there. But nonetheless, they've got about 760, 775 employees, a decent amount of revenue, and took a big amount of PE capital over the last few years. They've got the structure and resources to execute high-profile acquisitions like GrowthForce. Going to talk more about GrowthForce, the accounting firm here in just a second. But just a little bit further on G&A, what they did was in January of 2024, they opened up a strategic minority investment round. They brought in some capital from a group called TPG, and along with its internal management and employee owners, has put together a pretty nice tranche of funding that they're going out and making multiple acquisitions. I think they've made something to the tune of, yes, 13 acquisitions, 12 regional PEOs and payroll partners. They were snatching up groups like a bunch of AmCheck franchises among many others. They've been on an acquisition spree for the last couple years and doesn't look to be slowing down anytime soon. I don't know the size of some of these other ones, but when we talk about the GrowthForce acquisition, obviously this represents something completely different. Now, traditionally in our industry, when it comes to partnering or working with accounting firms and CPAs, it's exactly that. It's a partnership. Matter of fact, ADP and Paychex, and probably some of you listening, have CPA-centric reps whose whole job is to go out and call on CPAs to try to develop relationships and partnerships so that they can refer business in. The minute you go out and acquire a large accounting firm, and I'm using the word large, I throw that around, you know, large means a lot of different things to a lot of different people, but they're a $9.7 million accounting firm. By accounting firm standards, that is very large. So, you know, once you start pushing 8 figures in that world, that is a big deal. And so GrowthForce, G&A, both interesting companies for different reasons. GrowthForce, I actually stumbled across several years ago when I was looking for a new accounting firm. And one of the things that I thought was really interesting about them is they're one of the few accounting firms I've ever looked at, talked to, that has the pricing on the website. They had a form at the time. I don't know if it's still on their website. I did not notice it when I was just there poking around, seeing how they were pushing this deal out publicly. But you used to be able to fill out, give them your basic information, and they would send you their rate sheet, which I thought was really interesting. Again, I think that is more where this industry is going right now. You're starting to see things like, you know, SaaS-type pricing on accountants' pages where it's, say, for $19.95 a month, we'll do these 8 things. You know, the next tier up is $49.95 a month, and we'll do these 15 things. You're starting to see more of that. And I think that's going to become even more in vogue as AI becomes the dominant underlying driver in accounting. Because let's face it, when you're talking about crunching numbers, reading rules and regulations, like that's what large language models and AI were built for. That is what they do really well at their core. So I would expect this is an industry where you're going to see substantial disruption in the coming years, which makes me uber curious what the valuation was GrowthForce managed to command here. Maybe they see the writing on the wall in terms of how this will be commoditized, or maybe they just got a great deal and decided it was time to get out. GrowthForce, Founded in 2004 in Kingwood, Texas, now headquartered in Brentwood, Tennessee. Accounting, controller, and bookkeeping services for businesses— businesses and nonprofits is how they position themselves. Again, estimated revenue about $9.7 million, which checks out. I found about 61 people on LinkedIn, which breaks it down to about $150K in revenue per FTE, which is what you'd expect for a bookkeeping accounting kind of firm. You know, that makes them a midsize accounting firm, significant enough to bolster G&A's services portfolio, but not so large that it becomes an unwieldy acquisition. Now it does become something where it generates immediate value for both sides, right? And this is, this is the M&A appeal when you're acquiring something complementary to your service offering. So now G&A partners can go cross-sell into GrowthForce customers and tell them about all about the PEO and vice versa. GrowthForce sales team can go into the G&A clients, tell them all about the accounting and financial services that they offer. So you've got the immediate lift there beyond the sort of referral partnership cutoff. And I imagine— now listen, G&A is a PEO. PEOs are much more focused on broker-partner relationships than accounting-partner relationships. So maybe this is a channel that wasn't even active to them. And I would assume not, given their, uh, the size and, and the sort of public nature of this acquisition. I would not go out and acquire somebody that would immediately cut off 200 great referral partners for me unless there was substantial upside. And there is obviously substantial upside to this deal. Anytime you can add A, $10 million in top line growth, B, a book of clients to go and upsell that do not use your existing services, so you can sell them organically inside of there, and then C, the ability to bring a more comprehensive solution to market, which I think we all know is something that companies, if they want it, they want it. So you've got one of two types of companies that we work with is that, hey, I prefer the point solution. I don't want to put all my eggs in one basket. I want to make sure, you know, if I fire my payroll company, I don't have to fire my benefits broker. And I don't have to fire my accountant or, you know, whichever way you want to word that. And then you see the others who are like, look, I just want everything under one roof. So I've got one throat to choke, I've got one number to call, and I can get everything from one place on one invoice. And we see that a lot, obviously, where you have a PEO as well. And, you know, that's one of the many value propositions people glom onto when they're interested in the PEO is, hey, I want to get all my stuff from one spot. I want my payroll, my HR, my benefits, my workers' comp, my retirement. I want it all on one invoice from Guru instead of, the 5 different invoices I used to have. So let's talk a little bit more about the deal itself. What did G&A say about the deal publicly? Well, they— the CEO, who is a CPA himself, has positioned the GrowthForce deal as a way to help business leaders better understand their financials. So he said, this acquisition marks a significant milestone. It enhances our ability to deliver financial clarity and peace of mind to our clients. And now this brings up the obvious question here, right? Are they going to create a unified platform? And so from what I understand, Growth, G&A has their own PEO platform. They reference iSolved a couple of places on their website, but I'm thinking maybe it's old branding or they've got iSolved under the hood or something. If you've got some more details on that, drop me a note. Just outta curiosity, I'd love to know what platform they're on. It was not any of the domains that I noticed when I clicked through to log in on the website. I couldn't see anything when I inspected the page, but you know, there's, doesn't mean that there's not better ways to brand that a little bit better than maybe somebody who doesn't have $7.4 billion in revenue. Oh, we're billionaires. $7.4 billion in revenue, y'all. I mean, with that, I have a huge company. If we're going to start measuring the payroll of all my customers, I mean, on paper, I am like the CEO of a massive company right now. I didn't even realize it. It's pretty cool. I talk to founders in the payroll, HR, and accounting industry every single day. They all tell me they need more of one thing. It's not more money. It's not more AI tools. It's more time. How do I get more time? Well, I hired a virtual assistant through OutsourceScale.com that helps me manage my inbox, manage my calendar, handles administrative tasks for me, helps support my marketing efforts, and much, much more. The cool thing about OutsourceScale is that they actually train training the virtual assistants on the latest and greatest AI tools to make sure that they can't only do that administrative work for you that you need to get off your plate, but they're doing it in the most efficient and effective ways possible. I've been so happy with my assistant from Outsource Scale that I've actually added multiple other teammates to our other companies through them. Their pricing starts at only $7.99 a month, and they make it super easy to get a new teammate onboarded and part of your team very quickly. Check them out today at outsourcesscale.com. The next up is they said they want to build a team-based financial operations platform. They emphasize the ability to offer clients a fully outsourced finance department, not just HR. So the way that they put that is very interesting, right? So they clearly see the ability to go into those 3,000 G&A customers and bring a bundled value with one trusted partner, which is the other words they used to market. Now, what are some of the things they didn't say publicly that might be behind the curtain for why this is a good strategic move? Well, the obvious thing, right? When, when you're a PEO, you've really already got your tentacles into a bunch of different areas of a business. It is hard to unplug. It makes it sticky. All the value that makes it appealing to a small business owner also makes it harder to unplug, right? So if I've got my retirement, my workers' comp, my payroll, my HR, my benefits, and who knows what else with a PEO, it's a little bit more difficult to unplug than if I just have my payroll with them. And, you know, again, going back to the point solution thing. So if I can add another service on top of that, make it even stickier, I'm increasing not only the stickiness of, hey, here's how much longer they're going to stay with us. So I'm going to increase the LTV, the lifetime value of that customer from that alone. But then I'm obviously also going to increase the LTV based on the fact that I have a much larger deal size whenever I bring on a new customer. So there's great opportunities to increase the stickiness, LTV, and the ability to capture that referral margin instead of sharing it. So let's say they did have some really good active CPA partners and they were— had some revenue shares in place. Well, now they can cross-pollinate. They can have that revenue share happening in-house instead of paying it out. You know, we've talked in the past about— I think I've shared a story here It was an inspiration for when we recently started Outsource Scale. There's only one billionaire, one self-made billionaire in South Carolina, I think is the story. And this gentleman, I know a guy who used to work for him and he said he was in a team meeting with him one time and they got the bill for an event that they had and the guy was scanning the bill and he looked at it and he was like, what is this huge line item right here? And they said that was the catering, that was the food. And he said you could just see the wheels start to turn. And I'll be dang if a week later that guy didn't own a Mexican restaurant in town that was catering every company event inside the company. So, you know, somewhat of a vertical integration play there where I'm saying, hey, look, I can go ahead and scratch my own itch. This is something we need everywhere and it can be a profitable entity on its own. So we're all feeding our own machine and something there that they have where they can, hey, if there was any rev share going out, now they have ability to keep that in-house. And, you know, there's no channel conflict. The channels are determined if they've got a Salesforce sales a GrowthForce and a Salesforce at GNA, they should be able to create enough synergy across the board to probably upset that CPA model anyhow. So there's also standing out. So now if I'm going head to head with GNA and they have a customer that's much more interested in the ability to add bookkeeping services on top of payroll and HR, I don't have an answer for them. Uh, could be a unique differentiator when they're bringing that to market. And Now also, they can justify a higher price tag per client. Now, I'm not 100% sure if I did read— I believe G&A is on a percentage of payroll PEO billing model, which a lot of PEOs are, which is stupid. For the record, if you are listening to this and you own or run a PEO that does a percentage of payroll, good for you. I'm glad that you're able to get that bag. Bad for the customer. Why would a customer pay a percentage of payroll on their bonus runs or every time they give their staff annual raises, their rate with you goes up in addition to to raising your own rates. It's garbage. That's why we charge a flat PEPM, because that's how I would want to buy it, and that's how any other sane individual would want to buy it. And I think that's how we should operate our businesses, is by not only creating value with our products or services, but delivering them in a way that makes the customer happy. Crazy thought, right? And, you know, obviously they have investors now. And so here's the thing, when you have investors is they do not want you sitting on that capital. If they've deployed a tranche of capital for you to grow, they They do not want you sitting on that capital. Obviously they have not been doing, I think I said earlier, 12 or 13 acquisition deals in the last couple years. This is a vertical integration play that is unprecedented as far as I can tell in our industry, rolling an accounting firm into a PEO of this size. And so it's really, they're creating a category here. Now you might say, well, Matt, there's already some companies that do this. Companies like, you know, Creative Planning's not a PEO and probably your large regional CPA firms that offer payroll are not PEOs. But it is common. I start an accounting firm and then eventually I had payroll and then the payroll line becomes rather sizable in addition to the sizable CPA firm or accounting firm. But it's rare. So there are some examples of this. Again, I use Creative Planning, like they sell a ton of payroll deals and they sell a ton of accounting and they sell a ton of everything else under the sun. And so that's a unique model. But the question is, is G&A going to build the truly unified platform? And all indications seem to say that they are. They're looking to use that platform, Worksite it is called, the platform they use as a unified platform blending that software service, payroll, HR, benefits, bookkeeping, accounting. It will be interesting. They recently hired a new CTO. I'll be curious to see. I mean, you know how these M&A deals go in terms of integrations of technology, teams, etc. I'll be interested to see how quickly they can get something to market there, even some sort of MVP, minimum viable product, to show people the integration between finance and payroll, HR, and And it's really one of these interesting deals because how integrated will these two companies become? Will they be able to, again, in a messy M&A space and just knowing how hard it is to pull these deals off when both companies do the same thing and how sloppy they get when we try to add a business unit inside of a company, it will be very interesting to see how this plays out over time. But G&A is fighting against the Ventures of the world. Venture is going out and acquiring every PEO under the sun. G&A appears to be acquiring a lot of payroll books in an attempt to then upsell them onto the PEO. And so now they have this other thing in their bag, which allows them to grow unilaterally in a different way that a venture or someone else can't. So this deal matters a lot in our industry. I think it's going to open people's eyes to some new possibilities. I think it's going to give both of these companies opportunities to grow their own books in a unique way. So what should we do as payroll bureau owners, PEO owners, uh, leaders, et cetera? Well, Well, first I would look to your accounting firms that you do have and say, is there anybody where I could bring a unified solution to market if I so chose? So if this is appealing to you and you listen to this, you go, man, that's a good idea. Well, what about your best partner locally or regionally working with them to say, what kind of package can we bring together when a customer, if I hear anything about them liking bookkeeping, instead of me referring them over to you, can I just have an add-on service that we can, you know, basically say, Hey, we'll add bookkeeping in for $75 a month and here's where that pricing starts at, whatever it might be. Start to maybe look at, are there ways for you to better integrate with some of your really tight partners? We've done this on, you know, an example would be not on the CPA side, but on the benefit side is if they're not a fit for our PEO, we have one broker partner that has sort of outshined the rest in terms of his willingness and ability to navigate deals with us. And so we've said, hey, look, we're going to bring him everything that's not a good fit for the PEO and he's bringing us a bunch bunch of PEO deals that are not a good fit for him as a quote unquote traditional broker. And I think, you know, while you'd say, man, yeah, that makes sense, Matt, but you want 500 of those. Yeah. On some sides of the business you do, probably not for the person that you're going to bring accounting and bookkeeping and fractional CFO services to market, because then you or your sales rep are going to get into the situation of brokering who am I bringing in? So again, not going to be a fit for everybody, but maybe an idea if you've got enough critical mass already to swing around and get a partnership in place. And if you have both, do you have a good package that combines them? I'll shout out my friend Matt Gardner back in upstate New York. Shout out Matty. If you go to his website, Highline, H-I-L-I-N-E, highline.com or .co maybe, they do a really good job. Again, they're that more modern accounting firm. They put the pricing on the website. They have the payroll and HR that you can add into your accounting packages. I think they're well ahead of the game. They're a young, hungry company that's doing great things, led by great people. Proud to call them friends and partners as well. And I would say if you are in a market where there is G&A and growth for us, and obviously they have some markets where they're a lot stronger than others, as we all do, I'd start to create some uncertainty in that market with your accounting partners of, hey, did you see what G&A did? I'd be careful and I just make sure that people know and understand the implications of a deal like this and the that, you know, if they were partnering with local accountants before, well, you know, they're about to start backdooring them and trying to sell their clients out of business. And I think that's important for the accountants to know and help you to develop that relationship. And then, you know, final step would be if you're in this position is do you consider doing the same? How much more critical mass could you achieve? And again, each of us have different CPA relationships right now, but if it's a channel that's never really taken off for you and you are like the president of this organization, a CPA or an accountant by trade,, and you just happen to get into the payroll industry, maybe you look at acquiring a firm to create that level of synergy and bring a similar product to market. Again, not gonna be for very many listeners, but certainly something worth entertaining if that fits your bill. Hey, this has been a great episode of Payrollin'. You know the deal though. Listen, if you made it this far and you don't know about the gentleman's agreement and the lady's understanding, well, I'm here to tell you about it. The gentleman's agreement and the lady's understanding is simple. I just took an hour outta my day. I'm literally about to leave for vacation tomorrow and I got a million things to do, but I wanted to get this out so that I could create value for you. All I ask from you is you click that like button and you click the subscribe button. It's two things that collectively will take you about 10 seconds. Like, subscribe. Did you do it? Come on, man. Why not? That's the gentleman's agreement, ladies' understanding. Thank you so much for stopping by, payrollin'. I'm glad to be of service to you and I hope this was beneficial. Have a blessed day.