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PayScale Announces Majority Growth Investment from Francisco Partners at an Enterprise Value of $325 Million

Investment Will Help the Cloud Compensation Software Provider Accelerate Growth and Innovation

Seattle, WA and San Francisco, CA – PayScale, Inc., the leading provider of SaaS-based compensation data, analytics and software, announced today a majority investment from Francisco Partners, a global technology-focused private equity fund. This investment will provide PayScale with a new financial partner to build upon the company’s strong momentum and help continue to drive product innovation.

PayScale has grown substantially in recent years as employees and employers alike increasingly demand modern compensation software that enables more data-driven compensation decisions, leading to greater pay transparency and equity. The company’s growth has coincided with the emergence of social movements demanding greater gender and racial equality (both broadly and with respect to the pay gaps that still exist), as well as the increasing scrutiny organizations are under to make their business operations match their recruiting rhetoric. The Seattle-based company pioneered the use of big data and unique matching and prediction algorithms to create the industry’s most advanced compensation platform, which has propelled PayScale to market leadership.

“We have made tremendous progress in delivering our promise to Bring Pay Forward and in the process have established PayScale as the clear market and technology leader in SaaS compensation management solutions,” commented Mike Metzger, Chief Executive Officer of PayScale. “This could not have been possible without the tireless efforts of our employees to drive superior customer outcomes and their dedication to contributing to the PayScale culture. The future of PayScale is bright and we look forward to welcoming Francisco Partners into the shareholder base.”

“Compensation-related friction continues to affect employers and employees globally,” said Adam Solomon, Principal at Francisco Partners. “The changing dynamics of the workforce, including the shift from Boomers to Millennials as the dominant cohort in today’s workplace and the entrance of Gen Z, has made it impossible for CEOs to leave compensation to chance. PayScale helps bridge the disconnect by enabling its more than 8,000 customers to make compensation decisions that are more rooted in data and aligned to business goals than ever before. With this compelling value proposition, PayScale is well-positioned to capitalize on the large market opportunity ahead of the company.”

Peter Christodoulo, Partner at Francisco Partners, added, “We are extremely excited to be partnering with PayScale as the company enters the next chapter of its growth story. The team is focused on its mission of helping companies align their compensation practices with their business goals and of easing the burden of communicating well about compensation to employees, and we look forward to supporting and furthering that vision.”

Warburg Pincus will be exiting its investment in PayScale in this transaction. "We are proud of PayScale’s significant growth over the past five years to become the leading cloud compensation data and SaaS provider in the space,” said Ashutosh Somani, Managing Director, Warburg Pincus. “As growth investors, we feel privileged to have partnered with Mike and the PayScale team and we wish the company continued success in the future,” added Justin Sadrian, Managing Director, Warburg Pincus.

Raymond James & Associates, Inc. acted as exclusive financial advisor and Willkie Farr & Gallagher LLP acted as legal advisor to PayScale and its Board of Directors. Kirkland & Ellis LLP acted as legal advisor to Francisco Partners. The transaction is subject to customary closing conditions and is expected to close within the next 15 days.

About PayScale

PayScale offers modern compensation software and the most precise, real-time, data-driven insights for employees and employers alike. More than 8,000 customers, from small businesses to Fortune 500 companies, use PayScale to power pay decisions for more than 23 million employees. These companies include Encana, Patagonia, The New York Times, Sunsweet, T-Mobile, United Health Group, Wendy’s and Perry Ellis. For more information, please visit: www.payscale.com or follow PayScale on Twitter: twitter.com/payscale.

About Francisco Partners

Francisco Partners is an investment firm that specializes in technology and technology-enabled services businesses. Since its launch over 19 years ago, Francisco Partners has raised over $14 billion in committed capital and invested in more than 200 technology companies, making it one of the most active and longstanding investors in the technology industry. The firm invests in opportunities where its deep sectoral knowledge and operational expertise can help companies realize their full potential. For more information, please visit www.franciscopartners.com.

About Warburg Pincus

Warburg Pincus LLC is a leading global private equity firm focused on growth investing. The firm has more than $58 billion in private equity assets under management. The firm’s active portfolio of more than 180 companies is highly diversified by stage, sector and geography. Warburg Pincus is an experienced partner to management teams seeking to build durable companies with sustainable value. Founded in 1966, Warburg Pincus has raised 18 private equity funds, which have invested more than $74 billion in over 860 companies in more than 40 countries. The firm is headquartered in New York with offices in Amsterdam, Beijing, Hong Kong, Houston, London, Luxembourg, Mumbai, Mauritius, San Francisco, São Paulo, Shanghai and Singapore. For more information please visit www.warburgpincus.com..