New Zealand-based financial software as a service (SaaS) company Xero has announced that it will pick up Australian payroll start-up Paycycle in a bid to beef up its online accounting offering.
The Paycycle acquisition is set to cost Xero $1.5 million, with the deal made up of $1 million in shares and $500,000 in cash.
Xero will look to integrate Paycycle's payroll platform into its own, while rolling the Paycycle staff into the Xero business.
Paycycle co-founder Stuard McLeod said that the acquisition will happen behind the scenes, with minimal impact to users of either Xero or Paycycle.
"Because both are SaaS products, the integration of Paycycle into the Xero platform will happen mainly at the back end, with minimal change for users. Once the integration is complete, customers ... will have the convenience of being able to access both systems from their Xero user account," McLeod said in a statement yesterday.
McLeod said that he was pleased to see how far the payroll start-up had come.
"There's no doubt that the evolution of Paycycle from a bootstrapped start-up to an acquisition target for a global business such as Xero fills us with a great sense of achievement."
Full integration between Xero and Paycycle is set to be completed in early 2012.