Paylocity's $325M Acquisition of Airbase: A Game-Changer in Corporate Spending Management

Paylocity Acquires Airbase for $325 Million

HR and payroll software company Paylocity has announced its decision to acquire Airbase, a corporate spend startup, for $325 million. This acquisition is subject to regulatory approval and is expected to close in 30 to 60 days.

About Airbase

Founded in 2017 by Thejo Kote, Airbase has developed a platform that helps midsized companies manage their spending through features like bill payments, corporate cards, and employee reimbursements. The company has raised over $100 million in equity funding from notable investors including Menlo Ventures, Bain Capital, and First Round Capital. At its peak in 2021, Airbase was valued at $600 million.

Strategic Implications for Paylocity

Paylocity, with a market capitalization of nearly $9 billion, aims to expand its total addressable market beyond human capital management (HCM) into the office of the CFO. Kote expressed that the acquisition presents a fantastic opportunity to create a unified HCM and Finance platform for mid-market businesses, leveraging Paylocity’s scale.

Financial Details

A source familiar with the transaction revealed that the structured deal does not include all cash on Airbase’s balance sheet, which will be returned to the company’s shareholders and employees. The total value of the deal is estimated to be slightly under $400 million.

Airbase's Growth and Competition

Airbase currently employs over 300 staff and has competed with companies like Ramp and Brex. While it has previously indicated achieving eight figures in annual recurring revenue (ARR), specific figures have not been disclosed. Notably, this is not Kote’s first successful exit; he previously sold Automatic to SiriusXM for over $100 million in 2017.