Xero said Thursday it’s acquiring Planday, a provider of workday management software, for up to €183.5 million ($219.7 million), expanding the cloud accounting software maker’s employee-scheduling abilities.
The acquisition is part of Wellington, New Zealand-based Xero’s strategy of growing its small business-oriented system, helping its customers deal with increasing compliance requirements, supporting more flexible forms of work, and looking after employees. Planday, based in Copenhagen, Denmark, has more than 350,000 employee users across Europe and the U.K. who use the system for employee scheduling, while enabling businesses to forecast and manage labor costs.
The deal, which is expected to close by the end of the first quarter of Xero’s fiscal year ending March 31, 2022, comes at a time when many companies have been relying more on remote workers and cloud computing as a way of dealing with the pandemic. While Xero’s home country of New Zealand has been mostly successful in controlling the spread of COVID-19, the company has more than 2 million subscribers around the world using its cloud-based small business accounting software. Adding Planday’s 350,000 users will expand that footprint substantially.
“The acquisition of Planday aligns with our purpose to make life better for people in small businesses and their advisors,” Xero CEO Steve Vamos said in a statement. “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.”
The deal is structured in a way that Planday will receive an upfront payment of €155.7 million ($186.4 million) and a subsequent earnout payment of up to €27.8 million ($33.3 million), depending upon several product development and revenue milestones. Thus, the total potential acquisition price for Planday is up to €183.5 million ($219.7 million). Around 45 percent of the upfront consideration will be payable in shares in Xero Limited, while the other 55 percent will be in cash. Up to 50 percent of the earnout payment will be settled in Xero shares with the rest being paid in cash.
“We’re looking forward to working within the Xero family to build a strong launchpad for businesses and employees to manage their time and reach their joint potential in life and in business,” Planday CEO Christian Brøndum wrote in a
Planday has been a Xero partner since 2019. The company was founded in 2004 and currently operates in Denmark, Norway, Sweden, the U.K., Germany and France. It intends to continue to offer services to its existing customers and partners, including other accounting software providers.
