Xero has announced the acquisition in Planday -- a workforce management platform (that allows small businesses to manage payroll, staffing levels, leave etc) -- in a deal worth EU155.7m plus a further EU27.8m in earnouts if certain targets are met (AUD$240m, plus AUD43m in earnouts). It has around 350,000 users.

It's all about broadening the small business offering. It will allow Planday to be cross-sold to existing Xero users, and expand it outside of Europe and the UK.

In theory, it should also bind Xero's offering tighter into customer's processes, and thereby increase retention and pricing power. Planday has been an ecosystem partner with Xero since 2019, so it's already integrated and you'd imagine Xero has some good insight into its popularity with users.

45% of the deal will be paid in shares (roughy $1m new shares, next to 146.7m outstanding), the rest in cash.

I really like xero. Actually bought a lot of shares years ago at ~$12 and thought i was a genius when i sold out at ~$20.. Not sure how many times i'm going to make the mistake of being too fussy and too conservative on price for high-quality, fast-growing businesses with long runways..

But maybe i'm still making that mistake with Xero right now. I just find it very hard to get past some of the multiples. A 24x price to sales, and a 320x PE, for a $17b+ company, just seems waaaay up there.