MBO Partners Receives Investment from Primus Capital to Fuel Growth and Innovation

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MBO Partners announced Wednesday that Primus Capital has taken a minority position in the company. This is the first time the company has accepted external private funding. The investment, of an undisclosed type and amount, will be used to advance “the company’s ability to deliver innovative solutions to the independent workforce and the enterprises that engage these services,” according to the press release.

The investment comes close on the heels of another vote of confidence: MBO Partners was just recently assigned a place on the Spend Matters 50 to Watch list for the third year in a row.

MBO Partners: From There to Now

Spend Matters vouches for MBO's reputation as an innovative business that has maintained a laser-sharp focus on developing services and technology solutions for the independent professional workforce and the enterprises that are increasingly engaging that growing population of talent. Long before the advent of the gig/freelancer economy and media’s popularization of the worker misclassification hazard, MBO was a pioneer in the space with its innovative compliance, AOR and payment solutions tailored to support independent professionals and provide cost efficiencies and risk mitigation for enterprises. The company asserts that it “built the only complete business operating system platform” for independent professionals who prefer to be (and can be qualified as) independent contractors.

Over the past several years, MBO has developed MBO Connect, a digital intermediation platform that the company describes as “enabling enterprises to curate their own preferred networks of independent talent while leveraging MBO’s enterprise-grade, secure, compliant and efficient engagement and payment process.” Spend Matters has been covering MBO Connect since its inception (chronologically, here, here and here). MBO Connect is important because it further differentiates MBO as a true platform-based enterprise services solution.

“The investment from Primus and the expertise they bring to our team will enable us to deliver more customer solutions, accelerate technology enhancements, and gain a larger industry footprint,” said Gene Zaino, CEO of MBO Partners. “The market has spoken, and it needs our platform as a keystone enabler across the growing ecosystem of new online communities of independent talent.

“We are extremely fortunate,” Zaino said, “to have spent years working with amazing enterprise clients, highly talented independents and many legal and regulatory experts to create an extraordinary platform and solution. We are excited to partner with Primus so we can accelerate our solutions to meet growing market demand.”

Spend Matters Perspective

We have been covering MBO Partners and its evolution since 2014. Since that time, we have maintained the perspective that MBO was a different breed compared with traditional compliance/AOR/payrolling solutions (many of them buried out of sight in various MSPs). MBO's major focus on the enablement of independent contract “professionals,” through a range of different compliant engagement models, was an early differentiator.

Over the past three years, MBO has demonstrated an ongoing commitment to innovation and technology, while keeping its eye on fundamentals that enterprises consider table stakes (e.g., risk mitigation, efficiency gains, friction reduction, systems integration). As noted above, MBO has augmented its comprehensive services and technology platform with MBO Connect, joining some number of other industry players that are bringing to market similar platform solutions that allow enterprises to manage their external, independent workforce.

In addition to having relationships with major VMS and MSP players — as well as a significant strategic partnership with PwC — MBO has also ventured out into the now evolving contingent workforce and services space in search of ecosystem partners, including complementary online talent platforms. We would not be surprised if we hear more about some of these before the end of the year.

Accepting external investment represents a big development for MBO. On the one hand, it means capital for expansion and solution development, and it is also a vote a confidence in the business and the strategy. On the other hand, it means the injection of new a set of expectations for the organization that will be transitioning from a founder-owned and managed business. (Note: MBO employees also participate in ownership.)

Knowing MBO and its philosophy that balances vision and innovation with circumspection and a certain conservatism, we might expect that this arrangement has been well thought out and vetted for business and cultural fit. Still, two seats on the board is significant and may say something about the size of the investment.

It should also be noted that MBO is moving into a brave new world that blends talent and technology — and that being said, MBO will be in good company. Success in the long run will depend on a number of factors, including weathering legal/regulatory changes around independent workforce and getting a sound footing and achieving scale as an enterprise-oriented platform with synergistic complementors and coopetitors in an emerging digital ecosystem. Envelopment by other ecosystem platforms is a possibility — but such a threat could signal the time for a favorable exit, especially if an acquisition is strategic. On the other hand, the hunted could become the hunter. But we are certainly getting ahead of ourselves.

From a services procurement perspective,

  • MBO presents a valuable service/solution, especially for enterprises that are or will be using significant numbers of independent contract professionals (e.g., engineers, software developers, computer and data scientists, management consultants of various kinds, etc.).
  • It should be noted that, at least at this time, MBO does not really provide a sourcing service, except for its stable of contract professionals that utilize MBO’s enabling services. So sourcing of talent into an affiliated talent community on MBO Connect falls largely on the enterprise (which is not meant to be a negative, just a clarification).
  • In addition, as far as we know, MBO Connect is not a pure-play, standalone technology platform (like a WorkMarket, for example), but rather an integral component in MBO’s comprehensive services/solution portfolio.
  • Furthermore, MBO’s services/solutions focus is, at least for now, independent professionals — so for other types of independent contract workers (e.g., blue collar) another solution may be needed.

Nevertheless, at this point, MBO certainly presents enterprises a solid platform and a set of best-in-class services that, except for sourcing, can provide a full lifecycle management solution for external professional talent; and, if indications are correct, a talent sourcing ecosystem for professional talent may be in the making.

We definitely see the recent investment by Primus as a vote of confidence in MBO’s current offerings and strategies and as well as extra fuel and some protection against turbulence during the company’s ongoing business execution in the new evolving world of contingent workforce engagement.

For practitioners, who are seeking to advance their organization’s compliant management of external contract professionals, also leveraging state-of-the art technology, we think MBO could be shortlisted without much further ado.

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