Sources: Gusto Paid $600M To Acquire Guideline, Plans To Divest Customers Linked To Rivals
Last month, Sources confirmed Gusto paid $600M to acquire Guideline, plans to divest customers linked to rivals as part of the deal. Gusto, the payroll and HR software giant, aims to expand its benefits offerings while avoiding conflicts with competitors.
Image Credits:Guideline
The acquisition brings Guideline’s retirement plan technology under Gusto’s umbrella, but the company plans to offload customer relationships tied to rival payroll providers. This strategic move signals how competitive the HR tech space has become.
Why Gusto Acquired Guideline For $600M
Guideline, founded in 2015 by TaskRabbit co-founder Kevin Busque, helps small and medium-sized businesses set up and manage 401(k) plans. Unlike traditional providers, it charges a flat, per-employee fee instead of taking a percentage of assets under management.
At the time of its last funding in 2021, Guideline was valued at $1.15 billion. While the $600 million purchase price is below that valuation, early investors including Felicis, Tiger Global, and NEA are still expected to see solid returns.
Strategic Divestment: Customers Linked To Rivals
One key detail in this deal is Gusto’s plan to divest customers linked to competitors. Sources say this decision ensures Gusto can fully integrate Guideline’s technology without managing accounts that conflict with rival platforms.
This selective approach highlights how consolidation in HR and fintech is often driven by not just growth, but also competitive positioning.
Guideline’s Growth And Future Under Gusto
Guideline has raised $340 million since launch, with backers like General Atlantic, which led its Series D round. According to CNBC, the startup’s annual recurring revenue (ARR) has been climbing steadily, thanks to its predictable subscription-based model.
Now, under Gusto, Guideline is expected to scale even faster. For small businesses, this could mean easier access to integrated payroll, HR, and retirement benefits in one streamlined package.
What This Means For The HR Tech Market
The Gusto–Guideline deal underscores the growing trend of payroll and HR platforms broadening their financial service offerings. As startups and incumbents compete for small business customers, strategic acquisitions like this one set the stage for tighter competition.
For SMBs, the promise is clear: simplified employee benefits with fewer barriers to adoption. But for rival HR tech providers, Gusto’s move is a direct challenge.
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