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  "documentTitle": "Automatic Data Processing (ADP) (ADP)",
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  "authorName": "William Ackman",
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  "presentationDate": "2017-08-17 00:00:00",
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  "notes": "The slide uses historical margin data and business mix percentages to establish Paychex as a valid proxy for ADP's SMB segment performance.",
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      "text": "Paychex is a direct comparable to ADP in SMB (low- to mid-20s% of ES)",
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      "text": "Payroll (~55%) and Human Resources Services, including Beyond Payroll (~22%) and ASO / PEO (~22%); business mix is very similar to ADP. Paychex’s ASO is significantly large; PEO is smaller as % of revenue.",
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      "text": "Both are mature industry participants with mid- to high-single-digit revenue growth and a “service bureau” legacy. Paychex had ~20% operational margins in the late 1990s. Paychex expanded margins to 32% by 2001, and 38% by 2013.",
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      "text": "Former senior ADP executives stated that internal “like-for-like” SMB-only benchmarking to Paychex showed 1,500bps+ lower margins at ADP, with some recent improvement.",
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      "text": "operational margins: 38%",
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      "text": "(1) PEO estimated at ~11% of total revenue based on management commentary noting PEO comprises ¼ of HRS revenue (Q2’2017 earnings call), growing double-digits. Pass-through costs estimated at $165m.",
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      "text": "Paychex is an Appropriate Comparable",
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