ASX-listed cloud accounting software vendor Xero has acquired Canada-based data capture and management software solution Hubdoc for up to $95 million in cash and assets.
Under the agreement, Hubdoc, founded in 2011 and headquartered in Toronto, will continue to operate as a standalone business within Xero. Hubdoc co-founders and co-CEOs Jamie McDonald and Jamie Shulman will remain in charge of the soon-to-be business unit.
Hubdoc's solution, which has customers in the US, Canada, UK and Australia, has been a part of the Xero ecosystem since 2014. The software automatically collects bank statements bill and receipts from more than 700 financial institutions, utilities, and suppliers, according to Xero, which stated that Hubdoc’s data capture capability was key to its strategy.
While the platforms will continue to be sold separately, Xero said customers could expect to see future integrations between the two.
The acquisition will be paid for in two stages, beginning with US$60 million payment (AU$81 million), 35 percent of which will be cash and 65 percent will be Xero equity.
A second tranche of US$10 million (AU$14 million) in equity will be issued to Hubdoc shareholders in 18 months, subject to the company meeting operational targets and conditions.
Xero chief executive Steve Vamos said the acquisition would add streamlined data collection and classification into the Xero model.
“The acquisition of Hubdoc enables us to take the next step in delivering a platform that seamlessly connect small businesses with their financial data, and their accountants and bookkeepers,” he said.
Hubdoc co-founders McDonald and Shulman said they were excited to partner with Xero in its mission to “rewire the global small business economy”.
The transaction is expected to complete by the end of August 2018.