More help is on the way for today's small businesses. Xero Limited (ASX: XRO) is acquiring US cloud-based inventory management provider LOCATE Inventory or LOCATE (the trading name of New Tack, Inc.)to better support the inventory needs of small business and enhance its ecommerce capability.
The move will embed LOCATE’s inventory and ecommerce talent and capability within Xero to enhance Xero’s inventory management offering. In addition, it will help meet increased small business demand for inventory and cash flow management tools.
The acquisition will help support Xero's strategic priority to grow the small business platform, strengthen its ecommerce offering and support future growth opportunities in North America and globally.
Using LOCATE’s inventory-accounting workflows, Xero’s new inventory solution will help small businesses track and manage inventory in real-time, across multiple locations and channels (including a number of Xero’s ecommerce partners) to better serve their customers and improve their financial performance. The new offering is expected to launch to US customers before being made available in other markets.
Xero CEO Steve Vamos says the company selected LOCATE because it has some of the most comprehensive inventory-accounting workflows in the US market, as well as a talented team known for its deep understanding of inventory management and product capability. "They will help us scale our cloud inventory management solution for small business, accountants and bookkeepers, as we strive to be the most insightful and trusted platform for small business.”
Vamos also says the acquisition will help support Xero's strategic priority to grow the small business platform, strengthen its ecommerce offering and support future growth opportunities in North America and globally.
Inside the details
Total consideration for the purchase of LOCATE and subsequent employee incentive payments will be US$19 million. On completion, which is expected to take place in the coming days, consideration for LOCATE of US$14 million is to be settled 20% in cash and 80% in shares in Xero Limited. Employees will be granted US$5 million in restricted stock units which vest between three and five years after completion, subject to continuing employment. Transaction, integration and operating costs are expected to have a minimal impact on Xero’s FY22 EBITDA.