Avalara to Go Private in $8.4 Billion Deal with Vista

In one of the largest take-private deals this year, tax software platform Avalara Inc. said it has agreed to be acquired by private equity firm Vista Equity Partners for $8.4 billion including debt.

Vista secured a $2.5 billion loan from private lenders and has brought in institutional investors as co-investors, according to Reuters. Vista offered $93.50 per share.

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Seattle-based Avalara runs a cloud-based automation platform that assists companies with tax compliance. Founded in 2004, it has clients including Pinterest Inc., Zillow Group, and Roku Inc. It went public in 2018 and saw business increase during the pandemic, when companies pivoted to software tools for tax preparation. Shares this year, however, have not performed as well, which is in line with the experiences of other companies that boomed during the COVID-19 period.

Vista, headquartered in Austin, concentrates on investments in technology and business software companies. It managed nearly $96 billion in assets as of March 31.

As valuations of public tech companies have fallen recently, due to high inflation sell-offs and constricting monetary policy, private equity buyers have accelerated their efforts to acquire companies and take them private. Some haven’t been able to raise enough capital, though, due to a more difficult environment for debt syndications, and have sought out private lenders instead.

In the first half of 2022, private equity firms spurred global dealmaking while overall M&A stalled. Proceeds from global listings were down 84% to $33 billion in the second quarter, according to Dealogic, with only 274 companies attempting to raise cash via an initial public offering, compared to 852 in the same quarter in 2021.

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