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Vista Equity Partners to acquire Avalara in USD 8.4 bln deal

Tuesday 9 August 2022 11:25 CET | News

Vista Equity Partners has acquired Avalara, a US-based tax automation platform, in a deal that values the company at USD 8.4 billion including debt.

Vista managed to secure a USD 2.5 billion loan from private lenders and bring in institutional investors as co-investors, according to Reuters.

Vista's offer of USD 93.50 per share, which marks a 2% discount to Avalara stock's closing price, sent shares down 3.86%. However, the price marked a 27% premium to the stock's close on July 6, after which it surged nearly 30% on media reports of a possible takeover.

Goldman Sachs & Co advised Avalara on the deal, which is expected to close in the second half of 2022.

Founded in 2004, Avalara runs a cloud-based software platform that helps companies with tax compliance. The company counts Pinterest, Zillow Group, and Roku among its customers.

Avalara went public in June 2018 and has benefited from the digital transformation during the global pandemic, when more businesses have turned to software tools to automate their tax needs.

The evolution of Avalara

The company had raised around USD 341 million ahead of its 2018 IPO, but it has undergone something of a ‘correction,’ with its market cap falling over the past year by roughly 60% to USD 6 billion in July 2022.

Avalara helps automating many of the processes involved in managing taxes in each market they operate.

Vista Equity Partners has acquired Avalara, a tax automation platform, in a deal that values the company at USD 8.4 billion including debt.

As many governments around the world collect taxes based on where a service is consumed, rather than where the service provider is located, keeping on top of which specific service is taxable, and at what rates is important for running a legally compliant business. That is why Avalara provides a funnel into local tax databases, so its customers always have access to up-to-date information spanning sales and use tax, VAT and goods and service tax (GST), excise and more.

In partnership with ERP, accounting, ecommerce, and other financial management system providers, Avalara delivers cloud-based compliance solutions for various transaction taxes.

Key trends transforming the tax functions

Companies are being pushed to develop new digital products and distribution channels and accelerate sustainable transformation, as seen in a survey by Deloitte. In the survey, tax leaders say their teams must have the resources and skills to give deeper advisory support on digital business models (65%), supply chain restructuring (49%), and sustainability (48%). This means redrawing the boundaries of what tax professionals focus on, and accelerating adoption of advanced technologies and lower cost resourcing models to meet compliance requirements and free up time.

In addition to the rising focus on business partnering, transformative changes to the way companies are being required to provide tax information to revenue authorities is also creating an imperative to modernise operations at a faster pace. More than 9 in 10 (92%) respondents say that shifting revenue authority demands for digital tax administration will have a moderate or high impact on tax operations and resources.


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Keywords: acquisition, merger, cloud, compliance, funding
Categories: Banking & Fintech
Companies: Avalara, Vista Equity Partners
Countries: United States
This article is part of category

Banking & Fintech

Avalara

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Vista Equity Partners

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