Tax Software Avalara Acquired By Private Equity Firm For $8.4 Billion


Publicly traded tax software, Avalara, has been acquired by the private equity firm Vista Equity Partners for $8.4 billion.
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According to a Bloomberg report:

Vista will purchase Seattle-based Avalara for $93.50 per share in cash, according to a statement Monday, which confirmed an earlier Bloomberg News report. The offer represents a 27% premium to Avalara’s closing price on July 6, the last trading day before news of a potential transaction first emerged.
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TechCrunch shared additional details about the deal, noting that Avalara's tax compliance software system is used by a number of well-known companies, including Pinterest, Roku, and Zillow.

Avalara provides businesses with a "funnel" into tax databases around the world to ensure full compliance on a global scale. As TechCrunch explained:

Indeed, many governments around the world collect taxes based on where a service is consumed, rather than where the service provider is located — and keeping on top of which specific service is taxable, and at what rates, is important for running a legally compliant business. Throw into the mix the vast array 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.
Credit: Getty Images

Before its 2018 IPO, Avalara had raised approximately $341 million, though market cap had fallen by around 60% to $6 billion in July 2022.

Now, however, the company has rebounded to over $8 billion as of last week.

On Friday, August 5, 2022, Avalara closed at $95 per share, making Vista's purchase price of $93.50 is slightly lower than market value at the time.
Credit: Getty Images

Avalara is expected to be a privately held firm by the end of 2022.

Reuters noted that this acquisition is indicative of a larger trend in which private equity companies have "ramped up dealmaking activity as valuations of companies across sectors have dropped due to a sell-off triggered by high inflation and tightening monetary policy."

Are you intrigued by Vista's purchase of Avalara?

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