Vista Equity Partners buys automated tax compliance company Avalara for $8.4 billion – TechCrunch

Global investment giant Vista Equity Partners has announced plans to buy automated tax compliance software provider Avalara in an all-cash deal worth $8.4 billion.

Founded in 2004, Seattle-based Avalara works with companies including Zillow, Pinterest and Roku, helping to automate many of the time-consuming processes involved in managing taxes in each market they operate.

In fact, many governments around the world collect tax based on where a service is consumed, rather than where the service provider is located – and keeping track of which specific service is taxable, and at what rates, is essential to running a legitimate business . Throw into the mix the wide range of variables involved, such as whether a transaction is B2C or B2B or whether a product is digital or physical, and things can get complicated pretty quickly for businesses looking to stay on the right side of local tax laws.

And that’s why Avalara provides a funnel into local tax databases, so customers always have access to up-to-date information about sales and use taxes, VAT and Goods and Services Tax (GST), taxes and more.

Tax times

The company had raised about $341 million prior to its 2018 IPO, and like many companies in recent times, Avalara has undergone something of a “correction,” with its market capitalization falling over the past year by roughly 60% to $6 billion last month, even if it had returned to more than $8 billion from last week. Alongside today’s acquisition news, Avalara also released its Q2 financials, where it reported a year-over-year revenue jump of 23%, although its operating loss nearly doubled to $56 million in the same period.

Vista notes that the proposed share purchase price of $93.50 represents a 27% premium to its closing price exactly one month ago — but it’s worth noting that the price is marginally lower than Avalara’s closing price of $95 on Friday.

Still, the $8.4 billion price tag is significant, and indicates the broader appeal that automated tax compliance software has in the investment sphere – in the last eight months alone, we’ve seen German startup Taxdoo raise $64 million, with Ireland’s Fonoa the latest. month locked down 60 million dollars.

While the deal is still subject to shareholder and regulatory approval, Vista said it expects the transaction to close before the end of 2022, after which Avalara will be a privately held company.

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