TL;DR: After years of M&A drought, big deals are returning. It’s not just Wiz and Scale.
In the latest billion+ acquisition, Xero just acquired Israeli-founded, NYC-based Melio for $2.5B to dominate US SMB payments.
This 13.4x revenue multiple proves strong B2B companies with real growth (and it’s strong) can still command premium exits. The deal shows acquirers are hungry for revenue acceleration—Xero expects to more than double group revenue by 2028 with this acquisition.
Key Metrics at a Glance
- Exit Valuation: $2.5B (down from $4B peak in 2021) + 0.5B in additional employee retention
- Revenue Multiple: 13.4x March 2025 annualized revenue
- Time to Exit: 7 years (founded 2018)
- Revenue Growth: 127% CAGR (FY21-25)
- Current ARR: ~$187M (March 2025 annualized)
- Customers: 80,000 SMBs
- TPV: $30B+ annually processed
- Final Round Valuation: $2B (2022, led by Fiserv); previous round, $4B (2021, led by Thrive and General Catalyst)
Learning #1: The Power of Solving a Real, Painful Problem
The “Aha” Moment: 70% of US SMB payments still use slow, inefficient methods (checks, ACH, cash). Melio attacked this head-on with intuitive A/P workflows.
Founder Matan Bar’s payments pedigree (sold first company to PayPal, ran PayPal’s Global P2P) meant he understood the pain intimately. The result? NPS of 45 and 71% TPV growth per customer in their first 12 months.
Takeaway: Don’t just digitize a process—eliminate the friction entirely. Melio didn’t just move payments online; they made bill pay delightful.
Learning #2: Multiple Revenue Streams = Sustainable Growth at Scale
Melio cracked the code on payments monetization with four distinct revenue drivers:
- Transactions (variable fees based on volume)
- Float revenue (income on funds held)
- Subscriptions (new monthly recurring fees launched in 2024)
- Syndication partnerships (35% of revenue)
This diversification enabled consistent 100%+ growth even as the company scaled past $150M ARR. Most SaaS companies struggle with growth deceleration—Melio maintained momentum through revenue model innovation.
Takeaway: At scale, your growth rate depends on how many ways you can monetize value creation, not just seat expansion.
Learning #3: The Syndication Playbook Can Be Massive
Perhaps Melio’s most underrated innovation: powering ~3,500 financial institutions serving 18M SMBs through white-labeled solutions.
This B2B2B model generated 35% of revenue while dramatically reducing customer acquisition costs. Instead of competing with banks, Melio made them partners—and let them handle the customer acquisition heavy lifting.
The Fiserv partnership (which led their 2022 round) exemplifies this: Fiserv’s ‘Cashflow Central’ embeds Melio’s A/P solution across their massive FI network.
Takeaway: Sometimes the fastest path to market dominance is making your potential competitors into distribution partners.
Learning #4: Israeli Tech Talent + US Market Focus = Winning Formula
Melio’s 600+ employee split (200 in NYC, 400 in Tel Aviv) optimized for both market proximity and engineering talent density.
The Israeli R&D hub provided world-class technical depth (CTO Ilan Atias came from Apple-acquired PrimeSense), while the NYC headquarters ensured deep US market understanding and customer proximity.
Even amid regional instability, this distributed model proved resilient—Xero specifically noted Melio’s business continuity planning in their acquisition docs.
Takeaway: Geographic arbitrage isn’t just about cost—it’s about accessing the best talent pools for different functions.
Learning #5: When to Say Yes to a “Down Round” Acquisition
The hard truth: Melio’s $2.5B exit represents a 37.5% discount from its 2021 peak valuation of $4B.
But context matters:
- Market timing: Fintech valuations compressed 60-80% from 2021 peaks
- Strategic premium: 13.4x revenue multiple still reflects strong growth
- Competitive dynamics: Bill pay market heating up with new entrants
- Scale opportunity: Access to Xero’s 4.4M customers and international markets
Matan Bar and team likely weighed the certainty of a strong exit against the uncertainty of riding out market cycles for a potentially higher valuation.
Takeaway: Sometimes the best exit isn’t the highest valuation—it’s the right strategic fit at the right time. A $2.5B “down round” is still life-changing liquidity.
The Bottom Line
Melio’s journey proves that solving a massive, painful problem with elegant technology can build a billion-dollar business—even in a crowded market. The combination of product-market fit, revenue model innovation, and strategic market positioning created a company valuable enough for Xero to bet their future US growth on.
For founders: Focus on real customer pain, diversify your monetization, and remember that great exits come in many forms—not just peak valuations.
