Summary:
Xero acquires Melio for up to $3 billion, marking one of Israel’s largest tech exits
Melio serves over 80,000 U.S. small businesses and has processed $30 billion in payments
The deal includes $2.5 billion upfront and $500 million in earnouts for Melio employees
Melio’s embedded technology strategy attracted clients like Fiserv, Capital One, and Shopify
Xero aims to triple its North American revenue and diversify its business model with this acquisition
New Zealand-based fintech giant Xero has announced its acquisition of Israeli startup Melio in a deal valued at up to $3 billion, including earnouts. This strategic move grants Xero full control over Melio’s payments infrastructure and client network in the U.S., marking a significant expansion into its most strategic growth market.
Melio's Rise in the U.S. Market
Founded in 2018, Melio has quickly become a key player in digitizing how American businesses manage bills, vendors, and cash flow. With over 80,000 U.S. small businesses using its accounts payable and receivable solutions, Melio has processed more than $30 billion in payments and generated $187 million in annualized revenue.
Melio leadership. (Shlomi Yosef)
Xero's Strategic Ambitions
Xero, a publicly traded company on the Australian Securities Exchange, sees this acquisition as a pivotal step in its global expansion. "Adding Melio's world-class team, technology platform, and innovative A/P solutions enables a step change in our North America scale," said Xero CEO Sukhinder Singh Cassidy.
Deal Structure and Future Plans
The upfront payment totals $2.5 billion, with an additional $500 million in performance-based and time-based payouts over three years for Melio employees. The transaction, one of Israel’s largest tech exits, is expected to close within six months, pending regulatory approvals.
Melio’s co-founder and CEO Matan Bar, a former PayPal executive, will lead the combined U.S. business under Xero. "Joining Xero is an incredible opportunity for the Melio team to further our mission to reinvent the way businesses pay each other," Bar stated.
Embedded Technology Strategy
Melio’s syndication model, which white-labels its software to banks and SaaS companies, has attracted major clients like Fiserv, Capital One, and Shopify. This strategy was a key attraction for Xero, which plans to integrate Melio's payments engine into its core accounting platform while expanding these partnerships.
Meeting Market Demand
With 78% of U.S. SMBs prioritizing integrated accounting and payments platforms, Xero aims to deepen its relationships with accountants, bookkeepers, and business owners by addressing this growing demand.
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