Xero inks $300 million Planday deal
Small business accounting software provider Xero, announced the acquisition of Planday, a leading workforce management platform with more than 350,000 employee users across Europe and the UK that simplifies employee scheduling, allowing businesses to forecast and manage their labour costs.
Aligned with Xero’s strategic priority to grow the small business platform, the acquisition of Planday intends to help small businesses save time and money, deal with increasing compliance requirements and support more flexible forms of work.
Planday is an open platform that integrates with Xero to deliver a real-time view of staffing needs and payroll costs, alongside key business performance metrics. Combined with Xero, it is able to provide insights to a business or its advisor that help them to adjust staffing levels to match trading conditions and control labour costs.
With an upfront payment of €155.7 million and a subsequent earnout payment of up to €27.8 million based on product development and revenue milestones, the total potential consideration for the acquisition of Planday is €183.5 million. Up to almost half of the consideration will be payable in shares in Xero Limited and with the remainder being paid in cash.
Completion of the transaction is expected in Q1 of Xero’s financial year ending 31 March 2022 (FY22) and is subject to the satisfaction of closing conditions. The acquisition is expected to contribute approximately three percentage points of additional operating revenue growth for Xero in FY22. Transaction, integration and operating costs are anticipated to have a modest negative impact on Xero’s FY22 EBITDA.
Xero CEO Steve Vamos commented: “The acquisition of Planday aligns with our purpose to make life better for people in small businesses and their advisors. 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.”