Avalara, a provider of tax compliance automation software, is being acquired and taken private by global investment firm Vista Equity Partners for $8.4 billion, a generous 27% premium over the July 6 closing price as demand grows worldwide from retailers needing to sort out complex tax issues.
Seattle-based Avalara was founded in 2004 and claims 30,000 global clients using its software platform that helps them automatically calculate value-added tax (VAT), excise tax and many other variables across markets and jurisdictions.
With offices in Brazil, Europe and India, Avalara has a market capitalization of $8.06 billion, which dwarfs main competitor Vertex of King of Prussia, PA, at $1.75 billion. However, Avalara, which went public in 2018, has seen its valuation decline over 40% in the past 12 months, from $14.2 billion.
The deal is expected to close later this year, and Avalara will continue to operate under its brand name.
“Avalara is a mission-critical platform serving customers in a variety of end-markets, including retail, manufacturing, hospitality, and software,” said Adrian Alonso, Managing Director at Vista in a release. “Avalara’s solutions, its commitment to product innovation, and its network of extensive partner integrations, resellers and accountants make it a true leader in the space.”
Recently, Avalara struck deals with coupon marketplace giant Groupon and marketplace software firm Marketplacer. The latter deal allows Marketplacer clients to navigate marketplace facilitator laws which have grown much more complex since the 2018 Wayfair decision that made out-of-state sellers liable for sales tax.
Earlier this year, a partnership with Avalara also helped ecommerce services firm Digital River expand its services to 249 countries.
“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,” said Scott McFarlane, co-founder and CEO of Avalara, in the release. “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.”