Paychex, Inc. Annual report [Section 13 and 15(d), not S-K Item 405]

Annual report [Section 13 and 15(d), not S-K Item 405]

Business Combinations (Tables)

Business Combinations (Tables)

12 Months Ended

May 31, 2025

Summary of the Components of the Purchase Consideration

The following table summarizes the components of the purchase consideration:


In millions, except per share amounts
Number of shares of Paycor common stock outstanding (1)		180.5
Cash consideration (per share of common stock)	$	22.50
Total cash consideration	$	4,060.6

Fair value of Paycor equity awards replaced by Paychex for pre-combination services (2)	$	25.1
Total equity consideration	$	25.1
Total purchase consideration	$	4,085.7

(1)

Represents outstanding shares of Paycor common stock as of April 11, 2025.

(2)

Represents the fair value of Paycor's stock-based compensation awards attributable to pre-combination services. ASC 805 requires that the fair value of replacements awards attributable to pre-combination service be included in consideration transferred.

Summary of Purchase Price Allocation

Purchase Price Allocation


In millions
Total purchase price	$	4,085.7
Assets Acquired
Cash and cash equivalents	$	168.8
Restricted cash		0.0
Interest receivable		0.7
Accounts receivable		26.5
Prepaid income taxes		1.0
Prepaid expenses and other current assets		30.0
Funds held for clients		1,288.4
Property and equipment		34.4
Operating lease right-of-use assets		9.1
Intangible assets (new fair value)		1,776.5
Other long-term assets		1.9
Total assets	$	3,337.3
Liabilities Assumed
Current liabilities	$	136.3
Client funds obligation		1,288.9
Deferred income taxes		344.3
Other long-term liabilities		69.7
Total Liabilities	$	1,839.2
Fair value of purchase consideration		4,085.7
Less: fair value of net assets		1,498.1
Goodwill	$	2,587.6

Summary of Preliminary Fair Values Allocated to Identifiable Intangible Assets and their Estimated Useful Lives

The preliminary fair values allocated to the identifiable intangible assets and their preliminary estimated useful lives are as follows:


In millions
Identifiable Intangible Assets	Estimated useful life (years)	Estimated fair value
Developed technology	7 years	$	367.0
Customer relationships	12 years		1,118.0
Trade name and trademarks	15 years		234.0
Naming rights	13.4 years(1)		57.5
Total		$	1,776.5

(1)

Naming rights are amortized over the remaining term of the underlying contract.

Summary of Unaudited Pro Forma Financial Information

The following unaudited pro forma consolidated results of operations are provided for illustrative purposes only and present the estimated unaudited pro forma combined results of Paychex and Paycor for years ended May 31, 2025 and 2024, as if the acquisition had occurred on June 1, 2023:


	Year ended May,
In millions	2025		2024
Revenues	$	6,206.7	$	5,933.2
Net income	$	1,580.2	$	1,405.4