Inova Payroll, the company launched a year ago by former PayMaxx point man Farsheed Ferdowsi, has acquired a 17-year-old peer based in Chattanooga and with a presence in Knoxville and Atlanta.
Inova's combination with Computerized Payroll Solutions creates a company with almost 800 clients that have a combined payroll exceeding 25,000 people. Ferdowsi said the larger Inova — of which he will remain president and CEO — now has about 40 employees will remain headquartered in Nashville and be the largest payroll services firm based in Tennessee. Terms of the deal, which closed May 1, were not disclosed.
"This is a match made in heaven," Ferdowsi told NashvillePost.com. "I've been part of a lot of deals, either in the middle or on the periphery, and this is one of the best transactions I've ever been involved with."
Inova and CPS, which posted record numbers in 2011, were introduced last summer by principals at Chattanooga private-equity firm FourBridges Capital, an investor in Inova. Both companies wanted access to a bigger platform and had similar growth ambitions, Ferdowsi said. The combined entity now has operations centers in Nashville — Inova is based on Thompson Lane near Nolensville Road — as well as Chattanooga and Knoxville. It also offers a sales office in Atlanta that Ferdowsi wants to grow over time.
Ferdowsi said Inova is still on track to be cash flow-positive in about a year, a goal he laid when he launched Inova a year ago . He said his team will take about 60 days to look at the combined Inova-CPS operation, but he expects to overhaul very little, focusing instead on adding clients.
"It would be totally unwise for me to make any big changes," he said.
Financing for the transaction was provided by a syndicate of investors that includes Tennessee Angel Fund, Chattanooga Renaissance Fund, NCN Angel Fund, and other individual investors.
“This is a significant development that will advance Inova Payroll’s growth strategy,” said Sid Chambless, executive director of Nashville Capital Network. “We are very excited about the future of this important business combination.”