Quick look: Business looks a lot different than it did a decade ago, which has resulted in a spike in the M&A market. Strategically combining forces is helping companies have lasting power in a changing world, and having the right PEO partner is valuable as they prepare for their next phase of growth.
Who wants to make a deal?
Seems everyone is considering the option these days. Per recent research, a surge of companies are entering the M&A market as they switch gears to stay relevant.
The EY-Parthenon Deal Barometer forecasts M&A deal volume will increase by 20% in 2024 for U.S. corporations. Reports from Q1 have already shown a 36% increase in global deal value year-over-year with a rise in CEOs wanting to make acquisitions.
Interestingly, the intersection between M&A activity and professional employer organization (PEO) performance can be viewed as a deciding factor when determining a company’s overall value. As businesses continue to strengthen their market positioning by merging with or acquiring other companies, it’s a good time for brokers to reevaluate current client needs and the quality of their PEO partnerships.
M&A optimism on the upswing
For the first time in nearly a decade, experts are encouraged by the newfound confidence permeating throughout the M&A market. According to PwC, there are three specific factors boosting dealmaking optimism which differs from the surge experienced in late 2020 and the beginning of 2021.
Decelerated inflation and the demand for deals are the top two generators of this next phase. However, experts also believe companies are adapting and transforming business models to prepare for and prolong their future success.
With this optimistic backdrop, here are a few key findings from the PwC report to help brokers and their SMB clients navigate the M&A landscape in 2024:
- The technology and healthcare sectors are anticipated to see the most M&A activity, driven by innovation and the need for digital transformation.
- Environmental, Social, and Governance (ESG) criteria are becoming increasingly important in M&A decisions. Small businesses with strong ESG practices may become attractive acquisition targets.
- While North America and Europe remain dominant in M&A activities, emerging markets in Asia and Latin America are expected to see significant growth.
- Higher interest rates and economic uncertainties may impact deal valuations and financing options, requiring small businesses to be well-prepared and flexible in their negotiations.
- Heightened regulatory scrutiny on mergers and acquisitions could slow down the deal process, necessitating thorough compliance and due diligence.
- Private equity firms are likely to remain active players in the M&A space, often targeting SMBs for investment opportunities.
Business leaders focused on strategy and how these trends and demographic shifts will affect their growth long-term will drive the M&A market, which is where an experienced PEO partner can be part of the deciding difference.
Transitioning with the right PEO partner
Combining two or more organizations into one entity involves several moving parts joining together seamlessly and efficiently. Any hiccups during the acquisition can lead to delays or even the eventual downfall of the M&A.
If the operational aspect of a company is struggling, it can put an indefinite pause on moving forward with a merger. Therefore, those with the potential for M&A activity will want to take a realistic look at where they measure up.
Since HR is such a significant part of any organization’s operational makeup, a PEO’s implementation, customer service, and general capabilities are going to be in the spotlight. M&A leaders want to feel confident they’ll receive what they need to make a big move.
While most PEOs have the fundamental potential to see a company through a merger, personalized service can be a game-changer. Big-box PEOs have limited time and attention to address what modern businesses need to stay agile.
Whereas, ExtensisHR’s customized, people-first approach serves as a differentiator and is an exceptional extension to internal HR and payroll teams.
Explore the unique advantage of ExtensisHR
Several factors affect M&A activity, and companies want to feel their PEO can handle the transition. ExtensisHR has continually demonstrated its capabilities in supporting its clients’ ongoing success. Here is a closer look at some of the benefits differentiating them from other PEOs:
Dedicated customer service
ExtensisHR provides a dedicated service model and HR Manager who is well-versed with clients’ specific needs and changing situations. There is a hands-on level of customer support which allows companies to stay informed and agile as they evolve.
Therefore, business leaders feel prioritized as inquiries are addressed with urgency and accuracy. With phone calls answered within an average of 10 seconds and a 97% same-day resolution rate, clients can receive answers in real-time versus waiting on an automated response as is common with big-box PEOs.
ExtensisHR also more than doubles the average Net Promoter Score (NPS) concerning customer satisfaction, further reflecting its steadfast commitment and accountability.
Elite industry credentials
Companies want a PEO partner with a solid infrastructure to show they can handle the challenges of a transition. Industry accreditation adds another layer of trust and reliability and verifies sensitive HR data will be securely protected at all times.
ExtensisHR is part of 1% of PEOs which upholds a trifecta of credentials, including being named an IRS Certified PEO (CPEO). Additionally, the team maintains a Service Organization Control (SOC) Type II Certification and is SHRM-certified to ensure they are equipped to provide the highest level of service to its clients.
All-inclusive HR services
Though most PEOs offer similar HR services, big-box PEOs often list talent management and other offerings as add-ons, making billing and pricing unclear. Meanwhile, working with a PEO partner like ExtensisHR, clients receive comprehensive services with full price transparency, as well as access to performance reporting to easily calculate ROI.
Proprietary HR technology
The mobile-first Work Anywhere® platform enables business leaders, managers, and employees to securely manage HR responsibilities, including benefits, payroll, recruiting, compliance, and more, at their convenience. There are features which also help them analyze data to consolidate workflows, enhance productivity, and build HR sustainability.
Long-standing industry success
Brokers with clients entering the M&A process can assure PEO stability as illustrated by ExtensisHR’s 25+ years of experience and expertise in the industry. The demonstrated year-over-year growth highlights the long-standing commitment to driving results for their clients.
Further, ExtensisHR has also embraced diversity as part of its cultural foundation. A diverse representation contributes to the wide-ranging and expanding needs of companies, particularly for recruiting and retention.
Having a PEO partner closely aligned with client goals and experienced in tracking market trends and growing demands is paramount to the success of any company at its various stages of growth.
As a broker-friendly PEO, we are here to support your portfolio growth and client relationships. Contact ExtensisHR today and learn more about how our expansive HR services and human-centric approach can be a competitive advantage.
