NEBS Buys an Interest in Payroll Firm
GROTON, MA—New England Business Service (NEBS) has entered into a strategic alliance with Advantage Business Services Holdings, reportedly the fifth largest payroll processing company in the U.S. Under the agreement, NEBS will market payroll services to small businesses throughout the United States, and Advan- tage will provide the fulfillment of these services. As part of this alliance, NEBS has acquired a minority equity interest in Advantage.
NEBS has purchased 10 percent of the common stock of Advantage for approximately $13 million in cash, and has also obtained incentive-based warrants, potentially to double that position over the next five years. NEBS will market payroll services under its nationally recognized brands and distribution networks. Advantage will provide all of the payroll processing activities using its well-established infrastructure.
Robert J. Murray, NEBS chairman and CEO, calls the move "a major milestone in our strategic direction as we now add a highly complementary service offering to our long-standing success in providing printed and other products to small businesses. Payroll processing is a rapidly growing, but largely under-developed opportunity in the small business marketplace, with attractive margins and continuing revenue streams."
Murray says NEBS did its homework as it was looking for a partner. "We have tested offering payroll processing services and believe they can be effectively marketed through all of our channels, ultimately making them accessible to most of our 2.5 million small business customers," he declares. "We further believe that the investment component of the relationship further solidifies the ties between NEBS and Advantage, while providing NEBS' shareholders an excellent opportunity to share in the value created through this alliance."
Murray also sees Advantage as the ideal partner. "It has the capabilities and expertise needed to readily service a large number of small business customers," he explains. "The two organizations are culturally well-aligned; we look forward to a long, beneficial partnership with them."
Charles W. Lathrop Jr., president and CEO of Advantage, adds, "We are excited by the opportunity presented through an alliance with NEBS. Advantage is one of the fastest-growing payroll processing companies in the U.S. We see this partnership as giving our business even greater exposure in our targeted small business market where NEBS has an unparalleled reputation and reach. We believe this arrangement will substantially benefit both partners, as well as the many small business customers who will utilize this service."