When it comes to paying employees, companies keep a close eye on what rivals are doing. To that end, one private equity firm is betting that companies might want more precise data.
The firm, Warburg Pincus, said on Thursday that it would invest up to $100 million for a majority stake in PayScale, a cloud-based software company that collects compensation data and offers that information to its business customers.
The deal underscores investors’ appetite for cloud software companies that collect steady revenue from subscriptions. Warburg Pincus, for its part, struck a similar deal in February, agreeing to invest up to $100 million in Dude Solutions, a provider of cloud-based software to manage building maintenance services.
The firm has been particularly active in technology recently. Last week, it agreed to acquire Electronic Funds Source, a corporate payments company, and earlier this month bought a majority stake in mercator, an information technology services provider to the airline industry.
PayScale, which was founded in 2000 and is based in Seattle, says it has more than 3,000 business customers across 13 countries. It plans to use the new money to improve its product offerings and finance its growth.
“At a time when businesses increasingly seek sophisticated analytics about employee compensation, PayScale’s offerings enable its customers to make better, faster and smarter decisions related to attracting and retaining the talent to power their organizations in a cost-effective manner,†Justin Sadrian, a Warburg Pincus managing director, said in a statement.
