Tax Software Leader Avalara Acquired by Vista Equity Partners for $8.4B

Vista Equity Partners recently announced the completion of its $8.4 billion acquisition of tax software company Avalara, which will go private in the deal. Avalara is based in Seattle and employs roughly 5,000.

Several shareholders tried to block the deal, with one of its earliest investors, Altair US LLC, claiming Avalara engaged in a “flawed and limited” sale process, according to GeekWire. Lawsuits relating to the transaction were also filed against Avalara.

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Altair issued the following statement regarding the transaction after it was initially announced: "As one of Avalara's largest and longest-tenured shareholders, we are confident in the company's capacity to create significantly more value for shareholders than Vista's opportunistic proposal. We continue to believe that the proposed sale to Vista is ill-timed, the result of an inadequate process rife with conflicts of interest, and significantly undervalues Avalara. That is why we intend to vote against this flawed transaction.”

Vista is an Austin-based global investment firm managing $96 billion in assets. It acquired all outstanding shares of Avalara common stock in the deal for $93.50 per share in cash.

Scott McFarlane, co-founder and CEO of Avalara, is looking forward to a bright future for his company: "Today marks an exciting new chapter for Avalara. We thank our employees, customers, partners, and shareholders for their trust during this process, and we are excited to begin our work alongside Vista.”

“As the leading enterprise software investor, Vista knows what it takes to pursue and achieve excellence,” McFarlane continued. “We look forward to partnering with their experienced team to advance our mission to become the global cloud compliance platform and provide even greater value to our customers and partners.”

Avalara initially went public in 2018, raising more than $300 million in private investment. As people sought out online services during the COVID-19 pandemic, its market capitalization exceeded $16 billion. In 2022, though, its stock was down 26% from its pandemic high.

30,000 customers, including Zillow Group and Pinterest, use Avalara’s compliance automation software to manage sales and taxes. Recently, the company purchased other tax-related software providers, including CrowdReason LLC and Track 1099.

Earlier this year, Vista bought Citrix in a deal with Elliott Investment Management valued at $16.5 billion, and in 2019, it acquired another public enterprise software company, Apptio, for $1.9 billion.