Paychex (NASDAQ: PAYX), a provider of payroll processing and other services, agreed to acquire rival Paycor HCM (NASDAQ: PYCR) in an all-cash deal for $22.50 per share. The offer represents an enterprise value of approximately $4.1 billion.

The acquisition has already been approved by the boards of both companies.

“This deal is the latest in a vibrant M&A environment for payrolling/compliance firms buoyed by a number of positive drivers for outsourced payroll solutions,” said John Nurthen, SIA’s executive director of global research. “SIA has recorded over 100 transactions in this space since 2014 in its Staffing and Workforce Solutions Mergers and Acquisitions Database, including 21 deals in 2024 alone.”

Paycor is based in Cincinnati and has approximately 2,900 employees. They serve more than 49,000 clients and support approximately 2.7 million employees in the US.

“The acquisition of Paycor is highly complementary,” John Gibson, president and CEO of Paychex, said in a press release. “It will enhance our capabilities upmarket, broaden our suite of AI-driven HR technology capabilities and provide new channels for sustained long-term growth.”

Paychex customers will benefit from an expanded suite of technology and advisory solutions, Gibson said. Paycor customers will benefit from Paychex’s product set of HR advisory and employee solutions.

“We believe this transaction will create a great outcome for our clients and key stakeholders, and we are very excited to be joining Paychex for the next phase of our journey,” Paycor CEO Raul Villar Jr. said in a press release.

The deal is expected to close in the first half of this year, subject to regulatory approvals and other customary closing conditions.

The companies also noted that Apax Partners — a majority shareholder in Paycor with 96.1 million shares — has approved the transaction.

Apax acquired a majority stake in Paycor in November 2018 for $1.3 billion and took the company public in July 2021.

For its part, Paychex is based in Rochester, New York. It serves more than 745,000 customers in the US and Europe and has more than 16,000 employees. The company says it pays one out of every 12 private-sector employees in America. In addition to payroll processing, Paychex also provides PEO services.