Deel acquisition of PaySpace Image credit https://pixabay.com/users/absolutvision-6158753/Deel, one of the fastest-growing SaaS vendors, has made its second acquisition of the year. It has acquired PaySpace for an undisclosed amount. The first acquisition was of Zavvy, an employee enablement platform. PaySpace is a South African-based payroll and HR company with an office in the United Kingdom. The firm services customers in 44 countries across Africa, South America, Middle East and has over 14,000 customers. In Europe, the solution appears limited to the United Kingdom, and there is no operation in the US.

This is a big deal for Deel as it brings a full-stack multinational payroll engine, localised for 50 countries, into its offering. The acquisition complements that of leading APAC payroll provider PayGroup, which it bought in November 2022.

With this acquisition, Deel believes it is the first global payroll & Employer of Record (EOR). It has a full-stack payroll engine localised for more than 50 countries and offers multinational clients a single interface to manage global teams. What isn’t clear is how quickly it will bring the PaySpace application into its single platform. Terms of the deal were not disclosed.

Realising ambitions

Deel has a four-year strategy to have a complete Payroll and HR solution across 100 countries. This acquisition takes a huge step in achieving that ambition. The company continues to grow quickly as well. It has achieved $500 million in ARR, not including this acquisition. Deel, now has 3,000 employees across 100 countries. It has also been EBITDA-positive and cash-generative for 18 months.

Alex Bouaziz, Deel co-founder and CEODeel Co-founder and CEO Alex Bouaziz commented, “Global payroll is hard to do and critical to get right. As a company, you want assurances you can pay your teams on time, compliantly, anywhere in the world. PaySpace’s single-platform payroll expertise and breadth of coverage, particularly in Africa and the Middle East, combined with PayGroup’s presence in APAC, will give Deel customers the reach they need to grow their businesses globally. Our long-term vision is to be the most comprehensive payroll system in the world.”

Enterprise Times: What does this mean

Deel is taking the Payroll world by storm. It is a serious threat to ADP as it extends its reach globally. It still needs to gain access to the wider European market, and one might expect another acquisition at some point to achieve that coverage. It is already listed as a leader by G2 in Payroll for companies of all sizes but still has to make up ground in the HR world. However, with the addition of PaySpace, it also gains access to customers such as Heineken, Coca-Cola Beverages, and Puma Sports.

While it has the four-year ambition to become a market leader globally, what is the exit plan for the company, which raised a massive $425 million in a Series D funding round led by Coatue in 2021? It has raised smaller amounts since, but the four-year plan could infer that Coatue will look to exit in 2025. Will Deel continue its growth with new investors, or will it look to IPO and continue its journey? Is another vendor likely to consider an acquisition? Several firms have tried to conquer global payroll, including Workday. Has Deel found the right formula to achieve it? It will be interesting to hear how integrated the different acquisitions are in the next few months, both from an organisational and technical perspective.

A year ago, Deel announced that following a funding raise of $20 million, it had achieved a valuation of $12 billion on just $295 million ARR, with 85% gross margins. With ARR now at $500 million, does that mean the valuation has not leapt to $20 billion?

Another interesting question is from whom is it winning this new business?

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