Avalara — the tax compliance automation solution provider behind products like Avalara Returns, AvaTax, and ECM Essentials — announced it will be acquired by a private investment firm that specializes in enterprise software companies, Vista Equity Partners.
Vista plans to acquire all outstanding shares of Avalara common stock for $93.50 each in an all-cash transaction valued at $8.4 billion, which includes Avalara’s net debt. The per-share purchase price represents a premium of 27% over the company’s closing share price as of July 6, 2022, the last trading day prior to media reports regarding a potential transaction.
The purchase was unanimously approved by the Avalara board. It is expected to close in the second half of 2022, subject to customary closing conditions, like approval by Avalara shareholders and receipt of regulatory approval. Once complete, Avalara’s shares will no longer trade on the New York Stock Exchange, and Avalara will become a private company, though it will continue to operate under the Avalara name and brand.
Scott McFarlane, co-founder and CEO of Avalara, said in an interview that he was confident that Vista is a good partner, noting that it understands the market they’re in and what Avalara is trying to do. He added that Vista also has a lot of experience with founder-led companies like his own.
Besides a nice payday for shareholders, he does not expect the purchase to entail dramatic changes in how Avalara works. He said Vista recognizes that they have a strong business model and would be unlikely to change something that appears to be working well. With this in mind, he believes Vista will help accelerate its ongoing efforts to expand internationally (he noted that Avalara’s products are already used in 206 countries) as well as develop new services and solutions.
“Where I see us going is just where we’ve already gone. I just think in this next chapter that the combination of what we created plus business expertise will take us to new heights,” he said. “The important takeaway is that those things aren’t going to change … . We love the [accounting] channel, we love our partners, it’s a fantastic moat for us and Vista has seen the power of that firsthand and really believes in what we’re doing. We won’t do anything to disrupt our channel. We’ll still do sales tax calculations, we’ll still do returns, and we’ll still continually add more products for our customer base — and when I say customer base, I don’t just mean our end users but also the partners.”
Goldman Sachs & Co. is serving as exclusive financial advisor to Avalara, and Simpson Thacher & Bartlett and Perkins Cole are acting as legal counsel.
Kirkland & Ellis is acting as legal counsel for Vista.