Cloud accounting firm Xero has just acquired Monchilla, a Seattle-based online payroll company.
Xero bought the startup from founders Jack Couch and Nanjuan Shi for $US4,127,688 in cash, together with 238,490 Xero shares to be issued at close of trade today. Half the shares will be subject to a number of trading restrictions.
Xero hopes the deal will boost its payroll offering in the US as it expands into the market.
“Over the last year, with the Australia and United Kingdom markets performing well, we have been focusing on delivering the best business software for the US market,” Xero CEO Rod Drury said.
“The cloud accounting market is just beginning in the U.S. 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.”
Xero will integrate Monchilla with its existing systems to enable electronic filings and payments of payroll taxes in the US next year. It will also include calculation support.
“We were really impressed by the Monchilla team and how they have approached filing and payment of payroll taxes in the U.S. Combining this capability with the work our own team are doing will allow us to develop a worldclass payroll experience for the U.S. over the next 12 months,” Drury said.
Monchilla cofounder and CEO, Jack Couch said, “We’re thrilled to join the Xero team and work together to deliver a worldclass, online payroll solution for small businesses in the U.S. market.”
The Monchilla founders will stay on at Xero and existing customers will transition to the new platform.
Earlier this year Drury indicated the company will be pivoting its operations to go after US market share over the next 12 months as it positions itself for a potential US listing.