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Avalara is Going Private in $8.4B Deal

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Vista will pay $93.50 per share in cash to bring the sales and use tax automation company private, according to a statement released by Avalara. The transaction is expected to close in the second half of 2022, pending shareholder and regulatory approval completion.

Aug 8th 2022
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Private equity firm Vista Equity Partners today agreed to acquire global tax compliance player Avalara in an all-cash deal worth $8.4B.

The Seattle-based cloud tax compliance platform was founded in 2004 and made a reputation for itself offering transactional tax compliance services, partnering with ERP, accounting, ecommerce and other financial management system vendors to offer solutions for various transaction taxes, including sales and use, VAT, GST, excise, communications, lodging and other indirect taxes.

Avalara was listed on the New York Stock Exchange in 2018, raising $207M. However, like a number of its publicly traded technology counterparts, suffered a correction in recent years, with its market capitalization falling by almost 60 percent to $6B in July 2022. The company’s most recent financial statements from Q2 2022 boasted of a total revenue jump of 23 percent when compared to the same period in 2021, though its operating loss rose from $30M to $56M over the same period.

In a statement, Avalara’s co-founder and CEO Scott McFarlane said the company will continue to operate under the Avalara name and brand, with few, if any, immediate changes to be made.

"For nearly two decades, Avalara has ambitiously pursued its vision to automate global compliance, making tax less taxing for businesses and governments around the world. As a leader in this category, we believe our continued investment in innovation and experience is exciting for our customers, partners, and employees. We are pleased to partner with Vista and will benefit from their expertise in enterprise software as we build and improve upon our cloud compliance platform,” said McFarlane.

“Avalara is a mission-critical platform serving customers in a variety of end markets, including retail, manufacturing, hospitality, and software,” added Adrian Alonso, Managing Director at Vista.

Founded by billionaire investor Robert F. Smith, Vista focuses on enterprise software, data and tech businesses, and has stakes in a number of high-profile companies including Canadian ERP tool Vena, the UK’s third-largest accounting software company Advanced, and Swedish buy now, pay later firm Klarna. In January 2022, it also wrapped up a $13B deal with Elliott Investment Management to buy cloud computing giant Citrix Systems Inc.  As of March 31 2022, the firm had $96B in assets under management.

The deal marks another move into the accounting market from private equity, following in the footsteps of financiers such as Hg Capital, which over the past five years has broadened its portfolio from accountancy software vendors such as IRIS, Dext and Access Group to include Azets, a conglomerate of more than 60 UK accountancy firms.

More generally, the market has seen a rapid rise in the volume of private equity deals as company valuations fall across the board - driven partially by high inflation and tightening monetary policy.

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