The total potential consideration for the deal is 183.5 million euros, making it the company’s largest acquisition to date

Cloud-based accounting software firm Xero is buying Planday, a Danish workforce management platform that simplifies employee scheduling, allowing businesses to forecast and manage their labour costs.

The total potential consideration for the deal is 183.5 million euros, making it the company’s largest acquisition to date.

This amount includes an upfront payment of 155.7 million euros, and a subsequent payment of up to 27.8 million euros based on product development and revenue milestones.

Nearly 45 per cent of the upfront consideration will be payable in Xero shares, while the remainder will be settled in cash. Moreover, up to half of the earnout payment will be paid in shares.

Planday, which has been a Xero ecosystem partner since 2019, will continue to offer services to existing customers and partners, including other accounting software providers.

In a press statement on Thursday, ASX-listed Xero said the transaction is aligned with its priority to grow the small business platform, helping firms save time, money and deal with increasing compliance requirements.

Planday’s cloud-based technology offers flexibility and self-service functionality through a mobile app.

Employers and employees can communicate easily, collaborate on scheduling, track time and attendance, manage payroll, vacation, absence, and other labour-related compliance needs, Xero said.

The deal is expected to be completed in the first quarter of Xero’s financial year ending March 31, 2022, and is subject to the satisfaction of certain conditions.

The acquisition is also expected to contribute about three percentage points of additional operating revenue growth for Xero in FY22, the company added.

Xero’s chief executive Steve Vamos said: The acquisition of Planday aligns with our purpose to make life better for people in small businesses and their advisers.

He said that Planday’s workforce management platform helps small businesses to respond to the rapidly changing nature of work. Planday also addresses the growing need for flexibility and rising compliance demands within the workplace.