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Okay folks, let’s talk about the operational model for a PEO that chooses to grow through acquisitions in addition to growing organically. First and foremost, a PEO must have a strong operational base and senior management team/talent and prove it can manage internal growth before making an acquisition. If and only if a PEO has such strength can the company be a successful buyer.

An acquisition is simply the addition of one very large client, depending on the size of the company you purchase. The purchase of a 500-worksite-employee company is much different than the purchase of a 7,500-worksite-employee company. Much of the Collins methodology described above would apply, just multiplied by the size and complexity of the acquisition. Look at it this way: if your average client size is 30, and you acquire a company of 2,500 worksite employees, what resources do you need to add 83 new clients all at one time? Assuming you also acquire talent with the acquisition company, you should have some help, but this takes lots of planning! Here are several things that will impact the operational model required to successfully acquire another PEO.

Download the full article that was published in PEO Insider®