SME accounting software firm Xero  has made its largest ever acquisition, picking up Canada’s Hubdoc, a data capture solution that helps accountants, bookkeepers, and small businesses to streamline administrative tasks such as financial document collection and data entry.

Founded in 2011, Hubdoc is headquartered in Toronto, Canada, currently serving customers in the US, Canada, UK and Australia. Hubdoc will continue to operate on a stand-alone basis within Xero, led by co-founders and co-CEOs Jamie McDonald and Jamie Shulman.

Hubdoc has been a Xero ecosystem partner since 2014. Hubdoc automatically collects bank statements, bills, and receipts from more than 700 financial institutions, utilities, telecom providers, and suppliers, delivering streamlined data capture and a seamless integration with accounting solutions such as Xero. This data capture capability is a key element of Xero’s code-free accounting strategy, which enables small businesses and their advisors to focus on growing their businesses.

Hubdoc will continue to be sold separately, and available to non-Xero customers, maintaining its current business model. Over the longer-term, customers can expect to see a deeper integration between Hubdoc and the Xero platform, servicing customers globally.

Xero remains fully committed to its open ecosystem strategy and Xero customers will continue to have access to the full range of more than 700 apps that connect with Xero.

Xero will pay the acquisition price for Hubdoc in two stages, initially US$60 million consisting of 35% cash and 65% in Xero equity. Xero has arranged new debt funding for the cash component of the acquisition price. A second tranche of US$10 million in equity will be issued to Hubdoc’s shareholders in 18 months, subject to meeting agreed operational targets and conditions. The first tranche of equity will be issued based on a five trading-day VWAP ending 30 July 2018, and the second tranche will be issued based on a five trading-day VWAP at the time of issue.

The transaction is expected to be completed in August 2018. The transaction and integration costs, together with continuing investment in Hubdoc’s growth, is expected to reduce Xero’s EBITDA in FY19 by approximately NZ$7 million.

Xero CEO Steve Vamos commented: “The acquisition of Hubdoc enables us to take the next step in delivering a platform that seamlessly connects small businesses with their financial data, and their accountants and bookkeepers. This acquisition accelerates our ability to streamline the collection and classification of the data small businesses and their advisors need in order to focus on driving better business outcomes.”