A pair of human resources and staffing services companies plan to expand their reach with the recent acquisition of PathGoal Employer Services in Raleigh.
New York-based PrestigePEO purchased the business from Headway Workforce Solutions on Aug 16., the companies announced. They declined to share the financial details of the transaction.
Each company is a professional employer organization (PEO) that pools small to medium-sized businesses (SMBs) together to provide them with benefits and services that would commonly be available to larger companies, said PrestigePEO CEO Andrew Lubash.
PrestigePEO is one of the largest PEOs in the U.S., according to the company. It will provide its services and technology platforms to PathGoal clients and build the newly acquired company’s workforce and infrastructure.
PathGoal President Adam Doman will remain with the company, which started in 2013. The company currently has about 20 employees and the potential to become one of the largest PEOs in the region with help from PrestigePEO’s business model, Doman said. To start, another 20 positions may be added to the Raleigh office in the next year.
“We’ve wanted to provide a different level of customer service,” he said. “We’ve done a great job at being hands on and an intimate part of [our clients’] business, but we’ve not been able to make the financial impact that we like in terms of health insurance and workers comp — the bigger ticket items. That’s one of the things that PrestigePEO has brought to the table for us.”
The acquisition marks the entry into North Carolina for PrestigePEO, which has a goal to reach even more SMBs throughout the Southeast.
PrestigePEO’s business grew about 20 percent to 25 percent year-over-year despite the pandemic while helping businesses that struggled with day-to-day operations, Lubash said. In the last two years, PathGoal experienced about 35 percent to 40 percent business growth, Doman said.
Moving forward, the companies’ leadership expects business to keep up the momentum as companies continue to seek out solutions to Covid-19-related challenges, including stimulus pay, mask mandates, legislative changes and work-from-home policies.
Additionally, there’s been an increasing trend of larger corporations using PEOs with full human resource capacities, Doman said.
Unlike most PEOs, PrestigePEO deals through insurance brokers, consultants, accountants and banks – rather than a direct sales force – a go-to market strategy PathGoal will incorporate.
Currently there are 173,000 businesses and 4 million employees covered under the PEO umbrella in the U.S., Lubash said, and that accounts for over $260 billion in wages.
“Businesses that use PEOs tend to grow quicker and are more profitable,” Lubash said. “They are more profitable because the employer isn’t spending their time on non-revenue-generating functions. They have been able to attract and retain better talent because as a small to mid-sized business, they can offer better benefits programs and retirement programs and so forth.”
Lubash founded PrestigePEO in 1998, which is now one of four out of over 480 PEOs nationwide that are certified by the Internal Revenue Service, he said.
PrestigePEO plans to add offices in New Jersey, Virginia, Washington, D.C., and Florida.