Fast-growing payroll services provider Deal is making its third major acquisition this year.
Deal announced on Thursday that it had acquired Hofy, a London-based company that helps deliver and manage office equipment for remote employees. Financial terms were not disclosed, but a source familiar with the matter told TechCrunch that the deal was worth more than $100 million.
Alex Bouaziz, co-founder and CEO of Deel, said the acquisition will allow Deel, which already has a partnership with Hofy, to achieve “tighter integration” with Hofy's services. In the long term, it will lay the foundation for Deel's new IT-focused product, “Deel IT,” he added.
“Later this year we will be releasing Deel IT which will include software provisioning, app access management, integration with mobile device management and identity tools, and lifecycle management of devices from deployment to retirement, repair and replacement,” Bouaziz said. “This will give our customers a complete IT stack, further positioning Deel as a one-stop shop for all things HR-related, and further positioning them to scale their business globally.”
Hofy co-founders Sami Bourmoum and Michael Ginzo will join Deel to help build out Deel IT, along with the startup's remaining management team and 120 employees. Bouaziz said Deel will work with Hofy's existing customers to migrate them to the Deel platform.
“Current Deal and Hoffy customers will not see any changes to their services,” Bouaziz said.
Bouremoum, a former Bain & Co. consultant, and Ginzo, who previously ran product at Deal (the acquisition was somewhat of a revolving door), launched Hofi at the start of the pandemic in 2020. The shift to remote work proved a big boon for Hofi, as many companies were forced to figure out how to set up and decommission work devices that were sent to employees' homes.
Once integrated with your HR system, Hofy can be used to set rules like device purchasing budgets, usage policies, etc. Once new employees are invited onto the platform, they can order the equipment they need before their start date, including laptops, monitors, smartphones, accessories, and more.
Hofy offered support to its customers, including loaner devices if equipment needed repair. It also handled offboarding, allowing admins to remotely wipe devices before collection, and provided an API that allowed HR vendors to offer hardware delivery and recovery as a managed service.
Prior to the acquisition, Hofy had grown its customer base to more than 700 companies (including Forbes, GoDaddy, HelloFresh, and Canva) and raised more than $30.2 million in funding from investors including CNP, Stride, 20VC, and Day One Ventures. In a 2022 interview, Bouremoum told TechCrunch that Hofy was “cash flow positive.”
“Many of our customers were asking us for help with equipping their employees,” Bouaziz says. “This feedback, combined with our own experience with Hoffy, led us to consider going deeper than a partnership.”
For Deal, which is currently valued at more than $12 billion and has raised $630 million, the acquisition of Hoffy marks another step toward dominating the payroll management market.
Deel's primary business is processing international payroll and hiring employees on behalf of organizations through local legal entities (Deel acts as the employer of record and manages compliance with each country's employment laws.) But the company also draws up contracts that comply with local labor laws, helps workers access health insurance, and provides immigration advice on visa procedures.
Earlier this year, Deal acquired Munich-based “talent development” startup Zavvy and Africa-based payroll engine PaySpace. Shortly after, Deal reported hitting milestones of $500 million in annual recurring revenue, 4,000 employees and 35,000 customers.