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Barbara Gamey at the Payworks headquarters in Winnipeg on Friday. The payroll software company, which she founded 25 years ago, has surpassed US$100-million in annual revenues.Matt Horseman/The Globe and Mail
Barb Gamey has almost no public profile outside Manitoba, despite being a prominent local community builder in her home province.
There, she’s chaired a record-breaking United Way campaign in Winnipeg, volunteered for other organizations including Special Olympics Manitoba, and co-led two high-profile initiatives for then-premier Brian Pallister. She sits on the board of the Canadian Football League’s Blue Bombers and is chancellor of the University of Winnipeg.
But the 68-year-old Ms. Gamey’s achievements in business have also earned her status as one of Canada’s most successful female entrepreneurs.
The Winnipeg-based payroll software company she co-founded 25 years ago, Payworks Inc., has quietly surpassed US$100-million in annual revenues without raising outside capital. That makes it one of Canada’s largest private technology companies and a leading Winnipeg tech-sector success, alongside SkipTheDishes and Bold Commerce.
Now, European private-equity firm Hg Capital has purchased an undisclosed stake in Payworks from its three co-founders, including Ms. Gamey, through its Genesis buyout fund, paying hundreds of millions of dollars.
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Terms of the deal, set to be announced Monday, are not being disclosed, but the Genesis fund typically invests in companies valued at €500-million ($810-million) or more. It’s the fifth Canadian software company that Hg has backed.
The investment follows private equity company Thoma Bravo’s deal last month to buy Payworks’ larger rival Dayforce, Inc. for US$12-billion.
“We think Payworks has massive headroom to keep taking share from the American giants [Dayforce and Automated Data Processing, Inc.], stay true to Barb’s original mission of building a Canadian champion here, and quintuple its size in its existing focus areas,” Hg director Alexander Johnson said in an interview.
Payworks sells payroll management software that enables companies to track time and attendance, analyze work-force metrics and perform other human-resource functions. It has about 45,000, mostly small-business customers, and processes paycheques for their 950,000 employees.
Unlike most successful Canadian software companies, Payworks does all its business in Canada, even handling customer calls and hosting its data domestically.
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The profitable, 650-person company is one of a group of subscription software companies whose annual revenue growth rate (20-plus per cent) plus operating profit margin add up to more than 40 − a mark of elite performance in the sector.
Mr. Johnson said that after backing several payroll businesses globally, Hg spent three years researching the Canadian market, determining that Payworks had “the best product, with the highest customer satisfaction.” Hg contacted Payworks more than a year ago to explore a deal.
Ms. Gamey had rebuffed previous entreaties from investors, but she said in an interview that Hg’s representatives differentiated themselves by showing a deep understanding of the sector.
“They brought a lot of observations to the conversation that we have been having internally” about growth opportunities, she said. “That kept the conversation going. It occurred to me there was some learning” to be gleaned through a partnership.
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Ms. Gamey, who comes from a family of entrepreneurs, is now among Canada’s most successful women founders.Matt Horseman/The Globe and Mail
Ms. Gamey comes from a family of entrepreneurs, including her father, who sold typewriters and computers. She didn’t start out as an entrepreneur, moving into sales in her 20s.
A job peddling office furniture led her to go work for a client, payroll software company Comcheq, in 1984. She worked her way up to vice-president of sales and marketing, staying on after Canadian Imperial Bank of Commerce bought the Winnipeg company in 1992.
She decided to leave after Ceridian (now Dayforce) bought Comcheq from the bank in 1999. The payroll software industry had been reduced through consolidation to two players, Ceridian and ADP.
She and ex-Comcheq chief executive John Loewen, along with local insurance entrepreneur Dave Johnston, founded Payworks in 2000, believing they could build a competitive solution that used modern software, provided better service and was priced below its rivals. (The two men are still board members; all three remain shareholders after the buyout).
“I felt we had enough of a value offering,” Ms. Gamey said. “If we could just be the alternative” to Ceridian and ADP, “we could build a sizable business.” Payworks poached many workers from Ceridian, which has a Winnipeg operation, including her two CEO successors, JP Perron, who retired last year, and Michael Penman.
Payworks was early in the trends of selling software over the internet and adapting its offerings for mobile devices. It expanded operations to 12 Canadian cities.
With Hg on board, Payworks’ strategy is to develop new human-resources offerings using artificial intelligence and sell them to existing customers and by continuing to add new clients.
“We think there is a ton of opportunity for us to grow and expand in Canada,” Mr. Penman said.
Hg also committed to continue supporting Payworks’ devotion to charitable causes. The company donates $1-million-plus a year to 300 organizations, matching donations from employees, pays its workers to devote time to causes and loans them to United Way drives.
”HG has a tremendous respect for our DNA, and we don’t see that having to change,” Ms. Gamey said.
Asked how she felt being one of Canada’s most successful female entrepreneurs, Ms. Gamey replied: “Haven’t given it a thought. I’ve lived my life and will continue to live my life based on giving back generously to the community where I live and trying to grow a business that has great culture and provides an opportunity for lots of folks.”
