New Zealand’s accounting software giant Xero has agreed to acquire B2B payments platform Melio for $2.5bn in cash and equity.  

The deal includes additional contingent consideration of up to $500m over three years, which is tied to performance targets and continued employment. 

Melio, founded in 2018 and headquartered in New York with offices in Tel Aviv, Israel, serves over 80,000 US SMBs and accounting firms with accounts payable, receivable, and cash flow management solutions. 

The platform integrates accounting and payment processes, offering seamless workflows and a variety of payment methods to enhance visibility and control over cash flow. 

Melio also partners with financial institutions such as Capital One and Shopify, and distribution partners like Fiserv, enabling embedded accounts payable products for millions of small businesses through its syndication model. 

The acquisition aligns with Xero’s 3×3 strategy, aiming to strengthen its US market presence by uniting accounting and payments into a single platform.  

Xero CEO Sukhinder Singh Cassidy said: ”We’re thrilled to announce we’re acquiring Melio, a leading US B2B payments platform that strongly aligns with our 3×3 strategy and US growth ambitions.  

“Adding Melio’s world-class team, technology platform, and innovative A/P solutions to Xero enables a step change in our North America scale and the potential to help millions of US SMBs and their accountants better manage their cash flow and accounting on one platform.  

Upon completion, expected within six months pending regulatory approvals, Melio’s CEO and founder, Matan Bar, will lead the combined US business, reporting to Xero’s CEO.  

Bar said: “Joining Xero is an incredible opportunity for the Melio team to further our mission to reinvent the way businesses pay each other.  

“Having worked closely with the Xero team, we’re excited by our shared purpose to scale in the US and combine Xero’s accounting capabilities with Melio’s accounts payable and receivable solutions to create comprehensive product offerings for our collective, valued customer base.” 

Last year, Xero purchased cloud-based analytics platform Syft while Melio secured $150m in a Series E funding round at a valuation $2bn.