New York-based fintech giant Payoneer has announced its acquisition of Skuad, a Singapore-based global HR and payroll startup, for $61 million in cash.
Payoneer’s purchase price for Skuad could increase significantly. If Skuad meets certain performance milestones within the first 18 months post-acquisition, Payoneer has agreed to pay up to an additional $10 million. Additionally, Payoneer has committed to granting $10 million in restricted stock units to key Skuad personnel, contingent on their continued employment. In total, the acquisition could be valued at approximately $81 million.
Founded in 2019 by Sundeep Sahi, Skuad has rapidly emerged as a key player in the global HR and payroll space. The company focuses on simplifying international hiring for small to medium-sized businesses (SMBs) across over 160 countries and 100 currencies. Skuad addresses the challenges of building distributed teams, including navigating varying market regulations, managing international payrolls, and facilitating remote onboarding. Before the acquisition, Skuad had raised around $19 million from investors such as Beenext, Anthemis, NMVM, Argor Capital, and several angel investors.
Payoneer, serving approximately 2 million businesses in over 190 countries and territories, aims to enhance its service offerings through this acquisition. Both Payoneer and Skuad target SMBs operating internationally, focusing on emerging markets. This strategic alignment contrasts with larger payroll management startups like Deel and Rippling, which typically serve larger enterprises.
The acquisition brings Skuad’s 200 employees into Payoneer’s fold, expanding Payoneer’s workforce to over 2,150 employees. Payoneer CEO John Caplan emphasized that Skuad’s high-growth recurring revenue model would bolster Payoneer’s capabilities. Recently, Payoneer reported record revenue of $240 million, a 16% increase year-over-year.
Caplan highlighted the $6 trillion B2B market as a significant growth opportunity. SMBs worldwide are increasingly exporting goods and services across borders, exemplified by BPOs in the Philippines, marketing agencies in the UAE, and beauty product exporters in South Korea. Caplan also noted the lasting impact of the pandemic on remote work and the shift towards more scalable solutions in labor cost management.
The fintech sector, facing a slowdown in venture capital investments, has seen a rise in mergers and acquisitions. By mid-April 2024, 159 transactions had been announced or completed, mirroring last year’s pace. Payoneer’s acquisition of Skuad is a strategic response to these market dynamics, aiming to enhance its service offerings and capture a larger share of the global SMB market.