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M&A Is Back! Melio’s $2.5B Exit to Xero — In Just 7 Years!
- Xero acquired Melio for $2.5B in a deal to dominate US SMB payments, showcasing the return of big M&A deals.
- The acquisition reflects a revenue multiple of 13.4x, demonstrating strong growth potential and premium exits for B2B companies.
- Xero aims to double group revenue by 2028 through this acquisition, emphasizing a focus on revenue acceleration.
- Key metrics include Melio's 127% CAGR revenue growth, ~$187M annual recurring revenue, 80,000 SMB customers, and $30B+ annual payment volume.
- Melio's success stemmed from addressing US SMBs' payment inefficiencies, achieving 71% TPV growth per customer within the first year.
- The company's revenue diversification model, including transactions, float revenue, subscriptions, and syndication partnerships, enabled sustainable growth.
- Melio's partnership strategy with financial institutions and white-labeled solutions contributed 35% of its revenue, reducing customer acquisition costs.
- A combination of Israeli tech talent and a US market focus contributed to Melio's success, utilizing a distributed employee model.
- Despite a 'down acquisition' with a $2.5B exit valuation, Melio's strategic fit with Xero and market conditions justified the move.
- The story emphasizes the importance of solving real customer pain, revenue model innovation, and strategic market positioning for successful exits.
- Melio's journey showcases building a billion-dollar business by addressing significant problems with innovative technology and strategic decisions.
- For founders, the focus should be on addressing customer pain points, diversifying monetization strategies, and considering the right strategic fits for exits.
- The tweet by Bessemer in 2025 reflects on their early investment in Melio, highlighting the potential they saw in solving small businesses' B2B payment challenges.
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