Avalara acquires Transaction Tax Resources for $377M
Seattle-based tax compliance software provider Avalara has acquired Transaction Tax Resources, Inc., a tax content provider with a high-powered customer list, for approximately $377 million in cash Monday.
TTR, headquartered in McMinnville, Oregon, offers information on U.S. sales and use tax rates, laws, software, and customer support to some of the largest and most complex companies and their internal tax teams. TTR will bring more than 1,400 customers to Avalara, representing more than 30 percent of the Fortune 500. They include the largest or second largest company in each of 40 industries, nine of the top 10 healthcare companies, eight of the top 10 telecommunications companies and five of the top 10 IT services firms. TTR will operate as a subsidiary of Avalara and will integrate its products with Avalara’s automation tools, which handle sales and use taxes, excise taxes, communications taxes, alcohol and beverage taxes, and other types of U.S and international taxes.
“Avalara works every day to improve and expand our compliance content for businesses of all sizes,” said Avalara CEO Scott McFarlane (pictured) in a statement. “I have long admired the TTR team and I am excited to have them join Avalara. As our teams work to integrate and execute, we believe the exchange of expertise, information, and technologies between the two companies will improve our products, grow our business, and continue to pioneer tax technology services in our field. As more businesses move to rely on digital infrastructure, we believe our technologies will change how tax teams think about cloud-based tax automation to support their business decision-making and growth.”
Avalara acquired 100 percent of TTR’s equity with a portion of the $377 million purchase price held back for a two-year performance-based earnout and to satisfy potential future indemnity claims. Avalara estimates that, on a standalone full-year basis, TTR will produce approximately $20 million in 2020 revenue and be break-even on GAAP operating income.
With the acquisition of TTR, Avalara aims to further its goal of being part of every transaction in the world through superior content deployed through advanced technologies. With the addition of TTR, Avalara plans to build out its enterprise-wide tax automation suite of software along with more content and data for its customers, particularly on the indirect tax side. TTR’s database of tax content adds to some of Avalara’s most important vertical markets such as retail, telecommunications, food and grocery, and manufacturing, and contributes new categories including automobile, construction, and financial services.
TTR’s main business is a subscription service for tax professionals in midsize and large businesses to determine and validate tax decisions and avoid costly mistakes. The content will extend Avalara’s existing database to now include detailed research and documentation. For the first time, Avalara will have a subscription product for its customers to validate and manage tax content to support their business.
Avalara and TTR both manage their own separate tax document management platforms, Avalara’s CertCapture and TTR’s Exemption Certificate Management System (ECMS). Avalara plans to combine the two to support any size business.
“Avalara and TTR have a shared vision of alleviating the burden of tax compliance on businesses,” said TTR CEO Shon Holyfield in a statement. “I work alongside the brightest minds in tax every day — on our team and with our customers. With Avalara, we have a partner that is committed to expanding the reach of our expertise for the benefit of tax and finance teams across all business sizes and verticals.”
Last year, Avalara acquired Indix AI technology, a company that uses artificial intelligence to aggregate, maintain and deliver global product and tax information, for an undisclosed sum. The acquisition came soon after Avalara bought Compli, which provides compliance services, technology, and software to producers, distributors, and importers of alcoholic beverages.