Intuit Inc. (NASDAQ: INTU), a leading provider of small business accounting and management solutions, today announced it has reached a definitive agreement to acquire EmployeeMatters (www.employeematters.com), a Stamford, Conn.-based provider of human resource management, benefits and payroll services via the Internet.
The acquisition marks a significant step in Intuit's strategic quest to expand its small business product and service offerings to help small business owners better manage the mission critical tasks of their businesses.
"Intuit became the leader in small business accounting software because we understood the mindset of small business owners. We took a complex problem and made it simple with QuickBooks software," said Steve Bennett, Intuit's president and chief executive officer. "In the last year, we've gone beyond accounting to provide drop-dead simple tools to help small business owners solve broader needs, like payroll and purchasing.
"EmployeeMatters offers Intuit several strategic advantages. The acquisition will allow us to enter the high-growth employee benefits space and leverage our existing customer base to drive more revenue per customer. It will also soon give us a standalone Web payroll product to broaden our payroll offering and reach small business owners who want the flexibility of managing their payroll on the Internet."
Intuit currently plans to promote EmployeeMatters' products under both the QuickBooks and EmployeeMatters brands. The company also plans to develop the capability for customers to integrate the data from their EmployeeMatters products and services within future versions of certain Intuit small business products.
Pioneering Web-Based Employee Management Services
Privately held EmployeeMatters was founded in February 1999, and today provides a broad range of human resources management services - benefits, insurance and Web-based payroll and tax filing - to small and mid-sized companies.
"According to industry analysts, small business owners spend nearly a quarter of their time on employee-related administration," said Elliot Cooperstone, EmployeeMatters' chief executive officer. "At the same time, research shows they spend twice as much per employee to administer their human resources than large companies. EmployeeMatters was created to bring some balance to this equation - to use the Internet to enable small companies to offer their employees big company HR services quickly, easily and at lower cost. This can be a powerful tool as small companies look to attract and retain top caliber talent. By combining with Intuit, we'll be able to offer these advanced solutions to a large base of potential users - business owners who are increasingly using the Internet to better manage their companies."
Since launching its service in April 2000, EmployeeMatters has begun working with companies in a wide range of industries to provide end-to-end HR solutions and works with key vendors in the employee management field. EmployeeMatters' payroll and employee management services are available nationwide. It currently promotes insurance services in New York, New Jersey and Connecticut, with plans to expand to other major population centers within the next year.
Terms of Agreement
Under the terms of the agreement, Intuit will acquire EmployeeMatters in a registered stock transaction valued at approximately $39 million, which may vary within a 20 percent range depending on Intuit's stock price according to a formula agreed to by both parties. The transaction has been approved by the boards of both Intuit and EmployeeMatters and is expected to close by the end of the second quarter of Intuit's fiscal year 2001 (January 31, 2001), subject to various conditions, including customary regulatory and other approvals. Intuit expects no material impact from this transaction to its fiscal 2001 revenue growth target of 22 percent and pro forma operating income growth target in the low 30 percent range. Intuit's pro forma operating income includes operating results of acquired companies, but excludes amortization and other acquisition-related charges.
EmployeeMatters will be operated as a separate business unit, headquartered in Stamford, Conn. Elliot Cooperstone, EmployeeMatters' CEO will become a vice president at Intuit and will continue to lead the EmployeeMatters business unit, reporting to Steve Bennett, and the majority of EmployeeMatters' current senior management team is expected to remain with Intuit. Intuit expects to gain efficiencies by integrating some of EmployeeMatters' operations with Intuit's existing operations. In addition, EmployeeMatters has reduced its workforce to make its operations more efficient. Together the actions will result in a reduction of approximately 40 EmployeeMatters jobs, or about one-third of EmployeeMatters' workforce.
About EmployeeMatters
Based in Stamford, Connecticut, EmployeeMatters, Inc. is the only fully integrated, web-based provider of employee administration outsourcing services to small and medium-sized businesses. Through its unique systems and sophisticated call center, EmployeeMatters offers a "virtual HR department" enabling clients to effectively manage employee administration and HR functions, such as payroll, benefits, retirement plans, business insurance and HR compliance. To date, EmployeeMatters boasts a wide range of service providers including: The Prudential Insurance Company of America, Empire BlueCross BlueShield, The Guardian Life Insurance Company of America, Horizon Blue Cross Blue Shield of New Jersey, Oxford Health Plans, MasterCard, ReliaStar, Authoria, eMind.com, US SEARCH.com, The Bureau of National Affairs, Inc. (BNA, Inc.), RecruitUSA, YouDecide.com and Financial Engines. EmployeeMatters is fully funded by FrontLine Capital Group (NASDAQ: FLCG), a holding company which develops and manages companies servicing small and medium-size enterprises (SMEs) and mobile workforces of larger companies.
