Tenex Capital Management acquired Progressive Employer Management Company (PEMCO), a professional employer organization based in Sarasota, Fla., and plans to grow the PEO through organic growth and additional add-on acquisitions.

The transaction closed Sept. 1; terms of the transaction were not disclosed.

“The PEO industry has reached an inflection point in growth and market penetration, as regulatory complexity and an improving labor market fuel demand for outsourced services in a largely untapped small and medium-sized business market,” said Clifford Sladnick, head of investment bank Brown Gibbons Lang & Company’s business services practice, which advised Tenex on aspects of the transaction. “PEMCO is well-positioned to capitalize on this growth and increase its market penetration, and we look forward to assisting Tenex in identifying additional quality PEOs to grow its business.”

Tenex typically invests up to $100 million of equity in each of its businesses. Tenex and McCarthy Capital in August sold nurse provider Medical Solutions to investment partners Beecken Petty O'Keefe & Company and Heritage Group.