LightBay Capital has made a strategic investment in Questco, a leading professional employer organization (PEO) specializing in outsourced HR services. This partnership aims to support Questco’s growth through direct sales efforts, acquisition opportunities, and technology investments. Questco, founded in 1989 and headquartered in metro Houston, provides HR solutions to over 1,200 employers nationwide, focusing on payroll, tax administration, healthcare benefits, and workers’ compensation. The investment from LightBay, a growth-focused private equity firm, aligns with Questco’s mission to support small and mid-sized businesses, ensuring high-quality service and customer satisfaction. The deal was facilitated by financial advisors and legal counsel from both sides.

HOUSTON and LOS ANGELES, July 31, 2024 - Questco (the “Company”), a leading professional employer organization (“PEO”) specializing in outsourced human resource solutions, announced today that it has partnered with LightBay Capital (“LightBay”), a Los Angeles-based, growth-focused private equity firm. Questco’s partnership with LightBay will allow it to further grow its direct sales efforts and channel partner relationships, pursue attractive acquisition opportunities, and make continued investments in technology.

Dedicated to serving the small to mid-sized business community, Questco offers a range of high-value, cost-effective HR services, including outsourced payroll, tax administration, healthcare benefits, and workers’ compensation to over 1,200 employers in all 50 states. The Company’s metric-driven focus on exceptional service has resulted in industry-leading customer retention and NPS scores, and a sustained track record of organic growth. Founded in 1989, Questco is headquartered in metro Houston, and has completed five acquisitions with service centers in Omaha, Colorado Springs, Greenville, Phoenix, and Dallas.

“We are thrilled to be partnering with the LightBay team. Questco has built a phenomenal organization that proudly supports small businesses and the people that enable their success,” said Jason Randall, CEO of Questco. “LightBay’s people-first approach matches perfectly with Questco’s culture, and its experience investing behind and scaling industry leaders aligns well with our plans for accelerated growth. Our team is energized to draw on this experience to grow, add capabilities, and find new ways to assist and delight our clients. I’d like to thank Parallel49 Equity for their partnership and support in helping to position Questco for this meaningful milestone.”

“Questco has all the hallmarks of a successful LightBay partnership”, said Adam Stein, Partner and Co-Founder at LightBay. “We are drawn to its high-quality people, long-standing client relationships, exceptional levels of service, and multiple opportunities for growth. The PEO industry supports the small and medium-sized business community, and we are proud to be part of a solution that allows those owners to provide enhanced access to benefits, technology, and services for their team members. We are excited to partner with Jason and his team.”

“LightBay’s investment in Questco is the result of our continued focus and bullish thesis around white- collar business-to-business services”, said David Leeney, Partner at LightBay. “Workforce redesign, the evolving landscape of how employers engage and retain talent, rising benefit costs, and increased regulatory complexity make tech-enabled human capital solutions providers like Questco more integral than ever before. We are proud to invest in another exceptional team to help them drive enduring growth.”

Lazard served as the financial advisor and DLA Piper LLP provided legal counsel to Questco and Parallel49 Equity in connection with the transaction. Piper Sandler served as the financial advisor and Kirkland & Ellis LLP provided legal counsel to LightBay.

About Questco
Questco is a premier Certified Professional Employer Organization (CPEO) that provides outsourced human resource solutions, enabling its small and medium-sized business clients to contain costs, relieve administrative burden, and enhance the employee experience. Established in 1989, the organization is headquartered in metro Houston, Texas, with additional service centers in Omaha, Nebraska, Colorado Springs, Colorado, Greenville, South Carolina, Phoenix, Arizona, and Dallas, Texas. Questco's clients enjoy a comprehensive set of offerings, including access to large group medical benefits and group workers' compensation insurance, expert HR advice, access to user-friendly HR technology, payroll, tax and benefits administration, employee liability and risk management programs, and 401(k) programs. For more information, please visit questco.net.

About LightBay Capital
LightBay Capital is a Los Angeles-based private equity firm that invests in high-quality companies to accelerate growth. Primarily focused on the business services, healthcare, and consumer industries, the LightBay Capital team has been partnering with innovative service-based companies collectively for over twenty years. LightBay Capital was founded in 2017 and is currently investing out of its second fund. For more information, please visit www.lightbay.com. To discuss investment opportunities, please contact David Leeney at dleeney@lightbay.com.