Xero, one of the leading accounting software companies in Australia and New Zealand has completed its largest acquisition to date. The software giant acquired Danish-based workforce management platform Planday for a cost of around €183.5 million. According to Xero, the objective of the acquisition is to create a vibrant ecosystem for SMEs and strengthen their foothold in the small business market in Australia and New Zealand.
Steve Vamos, CEO Xero said that the acquisition of Planday perfectly aligns with their purpose of simplifying the lives of small business owners and employees. He also said, “Planday’s workforce management platform helps small businesses to respond to the rapidly changing nature of work. Planday also addresses the growing need for flexibility and rising compliance demands within the workplace.”
Acquisition cost and finances
The acquisition will cost Xero a sum of around €183.5 million out of which, approximately € 155.7 million will be the upfront cost. The remainder amount of €27.8 million will be paid based on revenue milestones and product development.
Around 45% of the upfront cost will be paid out in Xero shares and the remaining amount will be settled in cash. On the other hand, around 50% of the earnout amount will be paid in Xero shares and the remainder will be settled in cash.
According to Xero, it expects the new deal to provide a boost of around 3 percentage points to its operating revenue growth in FY22.
New opportunities in new markets
After completing the acquisition of Planday, which Xero expects to be done within the first quarter of 2021, the company is set to expand its global presence. The new deal opens up new opportunities for Xero in Europe and the UK giving it access to clients in Norway, Sweden, Germany, France, and Denmark.
Since 2017, Xero has been relentlessly working on its long-term goal of establishing itself as a small business platform. According to then-CEO Rod Drury, the objective is to assist small businesses and help them create jobs, inject capital into them, and provide the means to trade with other businesses worldwide.
This plan was provided a massive boost in August last year when Xero announced the acquisition of the Australian cloud-based platform Waddle.
More about Planday
Planday is a cloud-based platform that allows SMEs to efficiently manage their labor force. It includes tools that help small businesses schedule shifts, improve staff communication, track attendance, time, and manage compliance issues. At present, Planday has nearly 350,000 employee users registered on its platform in Britain and Europe.