Gusto Acquires Guideline: Expanding Offerings for Small Business Retirement Plans and Aiming to Onboard 150,000 More Clients
Tech startup Gusto, renowned for its payroll and human resources software, announced on Wednesday its intent to acquire Guideline, a specialist in corporate retirement plans. The specifics of the agreement remain undisclosed.
Established in 2011 and headquartered in San Francisco, Gusto is among the most valuable venture-backed companies globally, with a valuation of $9.3 billion. Initially known as ZenPayroll, the company offered software for clients to manage payroll for their employees. In 2015, it underwent a rebranding to Gusto and broadened its services to include health insurance and workers’ compensation.
Since 2016, Gusto has provided 401(k) retirement plans in collaboration with Guideline. However, the partnership is not exclusive, allowing organizations to also establish Guideline plans through other payroll providers such as ADP, Block, Intuit, Paylocity, TriNet, and privately held Rippling.
Following the acquisition, these integrations will continue, according to Kevin Busque, Guideline’s co-founder and CEO, in an interview with a news outlet.
Both Gusto and Guideline focus on serving small businesses. Founded in 2015, Guideline boasts over 400 employees. In 2021, investors valued the company at $1.15 billion. As of 2023, Gusto employs more than 2,800 people and generates over $500 million in annualized revenue. Guideline’s annualized revenue as of January stood at $140 million.
Gusto aims to onboard 150,000 new clients this year, a figure that represents a small fraction compared to the 6 million employers in the U.S., according to Josh Reeves, Gusto’s co-founder and CEO. With a customer base exceeding 400,000 today, the company primarily serves the US market.
Post-acquisition, Gusto plans to offer Guideline services to more of its clients without revenue-sharing concerns. It also intends to expand into states that have implemented mandates requiring employers to provide retirement plans for their workers, Reeves added.