PEO Business Valuation
PEO Business Valuation Calculator & Exit Planning Built for PEO Owners
We built one platform that tracks your PEO 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 PEO Owners Have No Idea What Their Company is Actually Worth
Current PEO (Professional Employer Organization) Valuation Multiples (2026)
PEO valuations command premiums due to recurring revenue and high retention. 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 No more waiting for annual appraisals or paying $15K+ for outdated reports.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 PEO Value
Your service quality matters, but sophisticated buyers evaluate these factors that determine premium pricing:
Worksite Employees (WSEs)
Growing WSE Count
WSE count is the fundamental metric—how many employees do you co-employ? Growing WSE count demonstrates market traction. Track total WSEs and net adds monthly. Declining count signals problems with retention or sales.
Declining WSEs = losing scale
Client Retention
90%+ Annual Retention
PEO clients should be extremely sticky—the relationship is deep. 90%+ client retention indicates service quality and appropriate pricing. Lower retention signals service or pricing problems that significantly impact value.
High churn = service concerns
Gross Profit per WSE
Healthy, Growing GP/WSE
Gross profit per worksite employee indicates your economics. Healthy GP/WSE with growth demonstrates pricing power and service value. Track this metric carefully—it drives your profitability and valuation.
Low GP/WSE = margin pressure
Benefits Programs
Competitive Health, Retirement, Benefits
PEO value proposition often centers on benefits—health insurance, 401(k), and other benefits that small employers can't offer alone. Competitive benefits programs with reasonable loss ratios are essential. Understanding your benefits economics matters.
Poor benefits = competitive disadvantage
Workers Comp Management
Favorable Loss Ratios
Workers compensation is often a major PEO offering. Understanding your loss ratios, claims management, and mod rates is essential. Favorable workers comp performance demonstrates risk management that impacts profitability.
Poor loss ratios = margin drain
Compliance & Certifications
ESAC/IRS Certified, State Licensed
Certifications (ESAC, IRS certified PEO) and proper state licensing demonstrate operational legitimacy and compliance. Certified PEOs have competitive advantages with clients who value credential verification.
No certifications = credibility gap
How to Value a PEO
The U.S. PEO industry includes approximately 500 companies co-employing over 4 million worksite employees and generating approximately $300 billion in gross revenue. PEOs provide comprehensive HR outsourcing including payroll, benefits, workers' compensation, and compliance services through a co-employment model.
EBITDA is the standard valuation method. PEOs typically sell for 6.0x to 12.0x EBITDA, among the highest multiples in the services industry. This reflects the recurring revenue nature, high client retention, and scalable economics of the PEO model.
Revenue multiples are less meaningful for PEOs because gross revenue includes pass-through payroll and benefits costs. Gross profit or administrative fee multiples are more commonly used — typically 1.5x to 3.0x gross profit. Per-worksite-employee metrics are also common, typically $1,500 to $4,000 per worksite employee.
The unique valuation factor for PEOs is the worksite employee count, client retention, and workers' compensation loss ratio. Worksite employee (WSE) count is the fundamental scale metric. Client retention rates above 85% demonstrate sticky relationships. Workers' compensation management — including safety programs, claims management, and loss ratios — directly impacts profitability. PEOs with certified status (IRS CPEO certification) have a competitive advantage in client acquisition.
PEO M&A has been very active, driven by platforms seeking scale, geographic expansion, and vertical specialization. The industry's strong growth trajectory supports premium valuations. Use our free calculator above to get your instant estimate, then track your value monthly with YourExitValue.
Frequently Asked Questions
What multiple do PEOs sell for?
PEOs typically sell for 5.0x – 10.0x SDE or 8x – 16x EBITDA—premium multiples due to recurring revenue. PEOs with growing WSEs, high retention, and healthy economics command top multiples.
How does WSE count affect PEO value?
Directly. WSE count is the fundamental size metric. Growing WSE count demonstrates market traction; declining count signals problems.
Who buys PEOs?
National PEO companies, PE-backed PEO platforms (very active), payroll companies adding PEO capability, and insurance companies building employer services.
How important is client retention?
Critical. PEO relationships should be very sticky. 90%+ retention indicates service quality. Lower retention significantly impacts valuation.
Do certifications matter for PEO value?
Yes. ESAC certification, IRS certified PEO status, and proper licensing demonstrate operational legitimacy and provide competitive advantages.
What's the fastest way to increase my PEO value?
Three high-impact moves: 1) Grow WSE count through sales, 2) Improve client retention through service quality, 3) Optimize benefits and workers comp economics.