Oasis- largely considered the nation's largest PEO, recently completed the acquisitions of Professional Employer Plans, Inc. and Advantage Employer Solutions, Inc. The company made the announcement on January 14.

M&A Analysis

The PEO market has a lot of similarities to the HMO market- an area where we have seen considerable consolidation throughout the past several years. Companies can see enormous economies of scale, and "bolt on" acquisitions can dramatically increase scale.

Other things being equal, integration costs and complexity are fairly minimal in this business model. Hence the hurdle rate for an acquisition can be significantly lower than it might otherwise be in ohter industries.

We anticipate the PEO niche to continue to build momentum in both the number and size of M&A transactions, running counter to many other industries right now.