Xero, the cloud-based accounting firm, paid the equivalent of $10 million in cash and shares for US online payroll company Monchilla to help drive its expansion in the world's largest economy.
Xero paid US$4.1 million in cash and issued 238,490 shares valued at $20 apiece to acquire Seattle-based Monchilla from founders Jack Couch and Nanjuan Shi, who will continue with the firm, the Wellington-based company said in a statement. Half of the shares are restricted from trading for two years, the company said.
The software developer wants a million customers, and is targeting growth in the US market where it sees the potential to take market share of an estimated 29 million small to medium sized business owners. The company last year raised $180 million in new capital to fund its US growth plans and is eyeing a US listing after it reaches annual revenues of US$100 million, expected in this financial year, and has tapped former Microsoft chief financial officer Chris Liddell as chairman.
"Over the last year, with Australia and United Kingdom markets performing well, we have been focussing on delivering the best business software for the US market," said Xero chief executive Rod Drury. "The cloud accounting market is just beginning in the US and our proven speed of delivery and the ability to quickly integrate complementary technologies into our platform positions us strongly to take a share of this large market as it develops over the coming years."
Integrating Monchilla with Xero provides improved business-to-government connectivity and the opportunity to deliver electronic filing and payments of payroll taxes, with calculation support, across the US in 2015,the company said.
