Payroll Business Valuation
Payroll Services Business Valuation Calculator & Exit Planning Built for Payroll Company Owners
We built one platform that tracks your payroll company's value monthly, identifies exit gaps early, and ensures your personal finances align with your exit timeline.
1,000+ Businesses have joined YourExitValue.com
Most Payroll Company Owners Have No Idea What Their Business is Actually Worth
Current Payroll Services Valuation Multiples (2026)
Payroll services valuations command premiums due to recurring revenue model. Here's the market:
Every business is different. That's why you need to track your value.
Included in Your Exit Value is a complete Exit Planning Assessment where you track your progress quarterly against your results from the previous quarter.
Know your number and watch it grow
Most business owners guess at their value. You'll know it with precision.
Our platform uses six proven valuation methodologies to give you a complete picture of what your business is worth today—and tracks how that number changes month over month. No more waiting for annual appraisals or paying $15K+ for outdated reports.
See your trends. Spot opportunities. Make informed decisions
What Actually Drives Payroll Services Value
Your processing accuracy matters, but sophisticated buyers evaluate these factors that determine premium pricing:
Client Retention
95%+ Annual Retention
Payroll clients should be sticky—switching is disruptive. High retention (95%+) indicates service quality and customer satisfaction. Track retention carefully; declining retention signals problems. Low retention significantly impacts valuation.
High churn = service concerns
Revenue per Client
Growing ARPU with Services
Average revenue per client indicates service depth. Growing ARPU through added services—time tracking, HR, benefits administration—improves economics. Track revenue per client and add services to existing accounts.
Low ARPU = commodity positioning
Client Count
Growing Client Base
How many clients do you serve and is the count growing? Client count demonstrates market presence. Growing count signals successful sales; declining count raises concerns. Track net client adds monthly.
Declining clients = market share loss
Technology Platform
Modern, Scalable Software
Your payroll software platform affects scalability and client experience. Modern, cloud-based systems with employee self-service and integrations are expected. Legacy systems may require investment or limit growth.
Dated platform = competitive disadvantage
Service Diversification
Payroll + HR + Time + Benefits
Beyond basic payroll, added services—HR support, time tracking, benefits administration, workers comp—increase revenue and stickiness. Comprehensive human capital management captures more wallet share.
Payroll-only = limited offering
Client Size Mix
Small Business Focus or Mid-Market
Understanding your client size profile helps position for acquirers. Small business clients have different economics than mid-market. Concentration in either segment isn't wrong—but knowing your focus matters for positioning.
No clear focus = positioning unclear
How to Value a Payroll Services Business
The U.S. payroll services market includes thousands of providers generating approximately $25 billion in annual revenue. Payroll companies process employee paychecks, handle tax filings, manage benefits administration, and provide HR compliance support.
EBITDA or SDE multiples are the primary valuation methods. Payroll businesses typically sell for 3.0x to 5.0x SDE, or 5.0x to 10.0x EBITDA — among the highest multiples in business services, reflecting the industry's exceptional recurring revenue characteristics.
Revenue multiples for payroll businesses generally range from 1.0x to 2.0x annual revenue. Per-client metrics are also common: payroll companies are frequently valued at $3,000 to $8,000 per active client, depending on average checks per client and service depth.
The unique valuation driver for payroll is the client retention rate and float revenue. Payroll clients are extremely sticky — switching payroll providers is disruptive and carries compliance risk, resulting in annual retention rates of 85-95%. Additionally, payroll companies hold client tax funds between collection and remittance, earning interest income on this "float." Companies with value-added services like HR compliance, time tracking, benefits administration, and workers' compensation create deeper client relationships and higher revenue per client.
Payroll has seen significant consolidation with major players like ADP, Paychex, and Paylocity acquiring smaller providers. Regional payroll companies with strong client bases remain highly attractive acquisition targets. Use our free calculator above to get your instant estimate, then track your value monthly with YourExitValue.
Frequently Asked Questions
What multiple do payroll companies sell for?
Payroll companies typically sell for 4.0x – 8.0x SDE or 7x – 14x EBITDA—premium multiples due to recurring revenue. Companies with high retention, service diversification, and modern platforms command top multiples.
How does retention affect payroll company value?
Dramatically. Payroll should be sticky. 95%+ retention indicates service quality; lower retention signals problems. Retention directly impacts valuation multiples.
Who buys payroll companies?
National payroll companies (ADP, Paychex, etc.), regional payroll providers, PEO companies, HR technology platforms, and PE-backed human capital management consolidators.
Does service breadth affect payroll value?
Yes. Added services (HR, time tracking, benefits) increase revenue per client and stickiness. Comprehensive HCM captures more value than payroll-only.
How important is technology platform?
Increasingly important. Modern, cloud-based systems with self-service and integrations are expected. Legacy systems may limit growth or require investment.
What's the fastest way to increase my payroll company value?
Three high-impact moves: 1) Improve client retention through service quality, 2) Add services (HR, time tracking) to existing clients, 3) Ensure technology platform is modern and scalable.