Sage sells U.S. Payroll Solutions arm

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Sage, a U.K.-based provider of enterprise resource planning software, has sold its U.S.-based payroll outsourcing business for $100 million. The buyer is workforce management software maker iSolved, a portfolio company of tech-focused private equity firm Accel-KKR.

The deal is expected to close in three months, and the proceeds raised will be earmarked for growth and used to lower net debt.

According to Sage, the transaction is part of a strategy to focus on subscription software solutions that are either in, or have a pathway to, the Sage Business Cloud Accounting product. Formerly called Sage One, Sage Business Cloud Accounting is subscription-based software that provides accounting, payroll, payments and people management tools starting at $10 per month. The all-in-one angle at an accessible price point opens up the small and midsized market for Sage, which it has been aiming at in the U.S. for years.

The sale of its payroll arm comes at a time when accounting software providers are adding payroll capabilities of their own, or partnering with payroll solutions providers, so accountants can more easily provide that added service to their clients. While Sage certainly loses an opportunity by divesting its payroll division, perhaps increased focus on Sage Business Cloud, which provides a payroll tool, will be to its advantage.

The sale of the Payroll division is the first major move the company has made since appointing a new CEO, Steve Hare, in November. Former CEO Stephen Kelly stepped down in August, plagued by U.S. sales execution problems and weak subscription sales in the U.K.

Hare has been quiet about his goals for Sage, but at the time of his appointment, chairman Donald Brydon stated that Hare “impressed the board with the momentum, focus and clarity he has brought to the organization over the last few months as COO but also throughout his tenure as CFO.” He added, “As we looked externally for the experience, vision and deep knowledge required to accelerate operational execution it very quickly became clear through Steve’s early decisions and his clear prioritization that he is the right person to lead Sage.”

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