The deal, which has been approved by both boards, is expected to close by Jan. 31, Intuit said.

According to Steve Bennett, Intuit's president and chief executive officer, the deal will allow Intuit to "enter the high-growth employee benefits space and leverage our existing customer base to drive more revenue per customer."

"It will also soon give us a stand-alone Web payroll product to broaden our payroll offering and reach small business owners who want the flexibility of managing their payroll on the Internet," he said.

Intuit plans to promote EmployeeMatters' products under both the QuickBooks and EmployeeMatters brands. The company said it also intends to develop the capability for customers to integrate the data from their EmployeeMatters products and services within future versions of certain Intuit small business products.

Privately held EmployeeMatters, founded in February 1999, provides human resources management services, such as benefits, insurance and Web-based payroll and tax filing to small and mid-sized companies.

"By combining with Intuit, we'll be able to offer these advanced solutions to a large base of potential users -- business owners who are increasingly using the Internet to better manage their companies," said Elliot Cooperstone, EmployeeMatters' chief executive.

The firm's payroll and employee management services are available nationwide. It currently promotes insurance services in New York, New Jersey and Connecticut, and plans to expand to other areas within the next year.

Under the agreement, EmployeeMatters will be operated as a separate business unit, headquartered in Stamford, Conn. Cooperstone will continue to lead the EmployeeMatters business unit as a vice president at Intuit.

Intuit said most of EmployeeMatters' current senior management team is expected to remain with the company. However, the firm will cut some 40 jobs, about one-third of its workforce, to increase efficiencies.

In a separate release about the transaction, Scott Rechler, chief executive of FrontLine Capital Group, the holding company that funds EmployeeMatters, said the sale "represents one of several significant steps towards maximizing the value of our non-HQ holdings." FrontLine holds an interest in HQ Global, a provider of officing solutions that serves over 65,000 customers in 17 countries.

-- SmartPros News Staff

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