Gusto Agrees to Acquire Guideline, Enhancing Retirement Benefits for Small Businesses
In a strategic move to streamline payroll and benefits for small and medium-sized businesses (SMBs), San Francisco-based HR tech giant Gusto has agreed to acquire Guideline, a leading provider of affordable 401(k) retirement plans. The announcement, made on August 27, 2025, marks the culmination of a nearly decade-long partnership between the two companies, aiming to create a more integrated platform for employers navigating complex compliance and employee benefits. While financial terms of the deal were not disclosed, the acquisition positions Gusto to capitalize on growing state mandates for retirement savings and expand its ecosystem without revenue-sharing hurdles.
Background on the Companies and Partnership
Gusto, founded in 2011 as ZenPayroll and rebranded in 2015, has grown into a powerhouse in payroll, HR, and benefits software, serving over 400,000 U.S. customers with more than $500 million in annualized revenue as of 2023. Valued at $9.3 billion, the company employs over 2,800 people and plans to add 150,000 new clients in 2025. Guideline, established in 2015 by CEO Kevin Busque and co-founder Jeremy Caballero, specializes in low-fee, tech-driven 401(k) plans tailored for SMBs. With around 400 employees, 65,000 customers, over 1 million savers, and $20 billion in assets under management, Guideline generated $140 million in annualized revenue as of January 2025 and was valued at $1.15 billion in 2021 after raising $340 million from investors like General Atlantic and New Enterprise Associates.
The two firms have collaborated since 2016, when Gusto integrated Guideline’s retirement plans into its platform, making it the most popular add-on for Gusto users. This partnership deepened in January 2025 with Guideline’s integration into Gusto Embedded Payroll, allowing third-party platforms to embed seamless retirement solutions. Busque highlighted the alignment in a blog post, stating, “Gusto was our first fully integrated payroll partner and played a huge role in the validation of Guideline.”
Strategic Rationale and Benefits for SMBs
The acquisition addresses key pain points for small business owners, who often juggle multiple vendors for payroll, HR, and benefits. By bringing Guideline in-house, Gusto eliminates revenue-sharing arrangements and creates a unified dashboard for managing everything from payroll deductions to compliance and investments. “Now, by joining together, we can deliver what customers have been telling us they want all along: one modern product to handle payroll, health insurance, HR, time tracking, compliance, and retirement benefits—built for small businesses,” Gusto CEO Josh Reeves said in the company’s announcement.
For Guideline’s customers, the deal ensures continuity, with existing integrations to other payroll providers like ADP, Intuit, Paylocity, TriNet, Rippling, and Block remaining intact. The combined entity will focus on automating 401(k) contributions synced with payroll, handling IRS compliance, and offering intuitive tools like real-time dashboards and AI-driven personalization. This is particularly timely as more states implement mandates requiring employers to provide retirement options, helping SMBs avoid fines while attracting talent—78% of workers consider retirement benefits a key job factor, per recent surveys.
Impact on the HR Tech and Embedded Finance Landscape
This deal reflects a broader trend in HR tech, where consolidation enables embedded finance solutions to thrive. The global embedded finance market is projected to reach $146 billion by 2025, with retirement services playing a significant role. Gusto’s move allows it to tap into a $1.16 trillion opportunity by offering automated, compliant plans that reduce administrative burdens. Analysts note that the acquisition strengthens Gusto’s position against competitors, especially as SMBs face rising demands for integrated tools amid economic shifts and regulatory changes.
For employees, the integration means easier access to retirement savings, with features like automatic enrollment, low-fee index funds, and rollover options. Guideline’s Starter 401(k) plans, designed for small teams, will continue to prioritize affordability and simplicity, potentially expanding to more states with mandates.
Future Outlook and Regulatory Considerations
The agreement is subject to final approvals, but both companies expect a smooth transition, with no immediate changes to operations or customer experiences. Gusto plans to maintain support for other retirement providers on its platform, emphasizing choice for users. Reeves expressed optimism about scaling, telling CNBC, “We have work to do” to reach the 6 million U.S. employers. Busque echoed this, saying the partnership will “take it even further” in transforming the retirement industry.
As the deal progresses, it underscores the evolving needs of SMBs in a post-pandemic world, where tools like Gusto and Guideline are essential for compliance, retention, and growth. Small business owners can expect enhanced features, such as proactive alerts for state regulations and bundled services that save time and money, ultimately empowering teams with better financial security.