Exclusive: Paychex CEO Martin Mucci Talks Future M&A; Canada A Destination?


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As laid out in the first part of this interview, Paychex (NYSE: PAYX) has a powerful growth story.

CEO Martin Mucci explains further the role M&A plays in Paychex’s expansion.

Despite aggressively returning capital to investors, Paychex showed $153 million of dry powder in the last quarterly report.

Since taking the helm at Paychex, Mucci has overseen a slew of acquisitions to expand the range of offerings and ease of consumption:

  • SurePayroll (online payroll processing)
  • ePlan Services (defined contribution marketplace)
  • Icon Time Systems (time & attendance recorder)
  • ExpenseWire (automated expense report)
  • myStaffingPro (human resources)
  • Nettime (cloud-based attendance)

“I think you will continue to see product adds. We are also looking at other payroll companies that make a good fit for us to integrate into our payroll set, and we are always looking at other geographies,” said Mucci. “Acquisitions will still be a part of our going forward.”

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Geographic Expansion

“What we looked at from a strategic perspective is focusing now on two or three countries,” explained Mucci. Paychex has been building a German business for almost a decade and launched a Brazilian business, which Mucci called “the next best place to go.”

The chief executive laid out several factors he looks for to find a new home for Paychex. These include what the competition looks like, the density of small business and difficulty of compliance.

“Small businesses or a CPA might say, ‘Hey, I don’t want to do payroll anymore or HR because its getting too difficult.’ These are the places we look.”

He continued, “We are looking at a few other countries; it's probably a little early to tell. We’re certainly spending some time looking at Canada because of proximity [to see] if there’s something there that would be good. There may or may not be, but we are spending some time looking.”

Product Expansion

Paychex’s offerings are far beyond the legacy payroll's business, meaning there is a wide variety of products that could be added to the suite.

“We are very big on picking a product that is going to fit in our market,” said Mucci. "[We work on] integrating it so we can get multiple products on a single sign on to blend them and integrate them as much as possible.”

Shares of Paychex were last trading at $42.23.

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