PAYCHEX INC Goodwill & Intangibles Disclosure
Note K — Goodwill and Intangible Assets, Net of Accumulated Amortization
Goodwill and changes in goodwill as of and for the years ended May 31, 2025 and May 31, 2024 were as follows:
|
|
May 31, |
|
|||||||
In millions |
|
2025 |
|
|
2024 |
|
||||
Balance, beginning of fiscal year |
|
$ |
|
1,882.7 |
|
|
$ |
|
1,834.0 |
|
Changes during the period: |
|
|
|
|
|
|
|
|
||
Goodwill acquired |
|
|
|
2,626.5 |
|
|
|
|
46.7 |
|
Currency translation adjustment |
|
|
|
4.9 |
|
|
|
|
2.0 |
|
Balance, end of fiscal year |
|
$ |
|
4,514.1 |
|
|
$ |
|
1,882.7 |
|
Acquired goodwill for fiscal 2025 primarily relates to the Company's acquisition of Paycor, and the acquisition of Alterna for fiscal 2024. Refer to Note D for more information related to the Company's acquisitions.
The Company had certain intangible assets on its Consolidated Balance Sheets. The components of intangible assets, at cost, consisted of the following:
|
|
May 31, |
|
|||||||
In millions |
|
2025 |
|
|
2024 |
|
||||
Client lists |
|
$ |
|
1,797.9 |
|
|
$ |
|
675.1 |
|
Acquired developed software |
|
|
|
410.5 |
|
|
|
|
— |
|
Other intangible assets |
|
|
|
314.7 |
|
|
|
|
23.1 |
|
Total intangible assets, gross |
|
|
|
2,523.1 |
|
|
|
|
698.2 |
|
Less: Accumulated amortization |
|
|
|
575.8 |
|
|
|
|
503.7 |
|
Intangible assets, net of accumulated amortization |
|
$ |
|
1,947.3 |
|
|
$ |
|
194.5 |
|
During fiscal 2025, the Company acquired customer lists, excluding business acquisitions, with a weighted-average amortization period of 8.0 years. Refer to Note D for information related to the useful lives of intangible assets valued for our acquisitions.
Amortization expense relating to intangible assets was $90.7 million, $49.0 million, and $48.2 million for fiscal 2025, 2024, and 2023, respectively.
The Company did not recognize an impairment loss as it relates to its goodwill or intangible assets during fiscal 2025, 2024, or 2023.
The estimated amortization expense for the next five fiscal years relating to intangible asset balances is as follows:
In millions |
|
|
Estimated |
|
|
Year ending May 31, |
|
expense |
|
||
2026 |
|
$ |
|
295.7 |
|
2027 |
|
|
|
274.1 |
|
2028 |
|
|
|
255.4 |
|
2029 |
|
|
|
225.9 |
|
2030 |
|
|
|
196.5 |
|
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Jul 11, 2025 | Showing above |
| 2024 | Jul 11, 2024 | |
| 2023 | Jul 14, 2023 | |
| 2022 | Jul 15, 2022 | |
| 2021 | Jul 16, 2021 | |
| 2020 | Jul 17, 2020 | |
| 2019 | Jul 24, 2019 | |
| 2018 | Jul 20, 2018 | |
| 2017 | Jul 21, 2017 | |
| 2016 | Jul 22, 2016 | |
About Goodwill & Intangibles Disclosures
Goodwill and intangible asset disclosures reveal the premium paid in acquisitions and how management assesses whether that premium retains its value. Since goodwill is no longer amortized under US GAAP, the annual impairment test is the only mechanism that adjusts carrying values downward — making the assumptions behind that test critically important for investors.
Key signals: a history of goodwill impairments suggests management consistently overpays for acquisitions. Watch the gap between reporting unit fair value and carrying amount — when fair value exceeds carrying amount by less than 10-20%, a small decline in business performance could trigger a write-down. For finite-lived intangibles, examine useful life assumptions across customer relationships, technology, and trade names; aggressive estimates inflate near-term earnings. Compare total intangibles-to-total-assets ratios against peers to assess acquisition dependency. Rising goodwill as a percentage of equity can signal balance sheet fragility.