Private equity firm Vista Equity Partners is set to acquire Avalara, including debt, in a $8.4 billion deal. As per the agreement, Vista will acquire all shares of Avalara common stock for $93.50 per share in an all-cash transaction. The Avalara deal is the latest Vista acquisition, as the company had recently bought software company Citrix Systems Inc.

The global investment firm announced its decision on the Avalara deal on Monday, August 9. Vista has managed to secure a loan of $2.5 billion from private lenders to close the deal. Sources familiar with the matter said that Vista has brought in its lenders as co-investors to finalize the deal.

The tax automation software platform’s shares have been bought at a 27% premium over the company’s closing share price as of July 6.

What is Avalara?

Avalara has a database of tax content and rules for more than 190 countries and supports compliance requirements with artificial intelligence and machine learning. Founded in 2004, the company works with many MNCs, helping them automate tax processes for the countries they operate in. The group currently has over 30,000 customers and employs over 4,400 people worldwide. It uses its automation software to manage sales and other types of tax databases.

As tax requirements in different regions can get confusing, Avalara provides a funnel into local tax databases, which means its customers always have access to up-to-date information on different types of tax and more.

Avalara reported second quarter financials on Monday, with a revenue of $208.6 million, up by 23% for the same period a year ago, and up 2% from the first quarter.

Avalara Goes Private

In 2018, during its IPO, Avalara had raised nearly $341 million. However, last year its market value dropped by nearly 60% to $6 billion last month. As of last week, it is valued at $8 billion.

Although Vista is set to acquire Avalara at $93.50 per share, it is slightly less than its closing price of $95 per share on Friday. However, its shares dipped by nearly 3% on Monday morning to $92 per share.

Vista focusses on investments in technology and business software companies. As of March 2022, it has managed almost $96 million in assets for different firms.

Speaking about the Avalara deal, Scott McFarlane, co-founder and CEO of Avalara, said, “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. 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.”

“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. “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.”

The transaction was unanimously passed by the Board of Directors at Avalara and is expected to be completed by the end of 2022, after which it will become a privately-held company. The completion of the deal is subject to regulatory and shareholder approval.  The company will continue to operate under the Avalara name and brand even after the Vista acquisition.

The Avalara deal is the latest example of public companies being acquired by private players at bargain prices. Goldman Sachs & Co LLC is serving as the financial advisor to Avalara. Simpson Thacher & Bartlett LLP and Perkins Coie LLP are acting as legal counsel to Avalara while Kirkland & Ellis LLP is the legal counsel for Vista.

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