- Gusto is acquiring tax software company Symmetry, which was founded in 1984.
- It’s Gusto’s second-ever acquisition, following its deal to buy another tax startup in June.
- Gusto is building out its corporate development team and eyeing more tech-focused deals.
- See more stories on Insider’s business page.
Gusto, the $3.8 billion payroll and HR fintech is ramping up its M&A activity, with its second announced acquisition in as many months.
The startup plans to acquire tax-software company Symmetry in a deal meant to build out its existing small business-focused software. Gusto and Symmetry did not disclose the terms of the deal, which is expected to close later this month. GLC Advisors advised Symmetry on the deal.
Symmetry is used by payroll providers like ADP and larger employers like AT&T and Walmart, ultimately serving more than 60 million employees, nearly 40% of the US workforce.
Gusto has been a client of Symmetry since 2012. Symmetry was founded in 1984 by Tom Reahard, who first coded its payroll software on an Apple II.
Symmetry helps companies calculate withholding on employees’ paychecks, staying up to date on various county, state, and federal regulations that are complex and change frequently. Small businesses pay billions in penalties every year to the IRS due to inaccuracies in their taxes.
With Symmetry, Gusto wants to bring those numbers down.
“The way to keep ourselves accountable is to look at those numbers again. Were we able to decrease the number of fines that people pay, and were we able to decrease the number of payroll errors people make,” Tomer London, cofounder and chief product officer at Gusto, told Insider.
It marks the second-ever deal for Gusto, which announced plans to acquire Ardius, a research and development tax credit finding software, in June.
The acquisitions come after 50% growth in Gusto’s 2020 fiscal year that ended in April. It has raised $516 million to-date from investors including Dragoneer, Fidelity, and General Catalyst.
Gusto is also building out its corporate development team, and eyeing other acquisitions as a way to accelerate its product roadmap, Gusto cofounder and CEO Josh Reeves told Insider.
“It’s that momentum and realizing the relevance of what we can do to help small and medium business that has driven us to set a bunch of ambitious goals for the coming years,” Reeves added.
Gusto will use Symmetry’s tech to boost its new embedded payroll play
Symmetry’s 43 employees, led by CEO Elizabeth Oviedo, will all join Gusto. Oviedo took the helm in February 2020. Reahard, Symmetry’s founder, serves as chairman. Oviedo will stay on as CEO of Symmetry, reporting to London.
While the Arizona-based company has stayed independent for 37 years, its employees will join Gusto’s existing workforce of 1,400 employees.
Like Ardius, Symmetry will continue to operate as a stand-alone unit. There won’t be any impact to Symmetry’s existing customers and business lines.
Gusto will be able to integrate further with Symmetry’s tech and data, enriching its own tax-withholding software.
Across all its products, which include payroll, healthcare and financial benefits, earned wage access, and an employee digital wallet, Gusto wants its tools to be “opinionated” and “guided,” London said.
“To give that guidance and have that opinion, we need to have all the data and rules in the backend, and that’s what Symmetry enables us to do,” London said.
Together, Gusto and Symmetry plan to introduce alerts to employers ahead of tax code changes, and help employers manage address-specific tax codes, which can vary depending on which side of the street an employee lives.
Symmetry’s tech will also boost the value proposition of Gusto’s new embedded payroll play, announced in late June. It enables other software companies, like business banking fintech Novo and barbershop-focused software provider Squire to weave payroll into their businesses.
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