Blucora sells off TaxAct for $720M, rebrands as Avantax

Blucora, a Dallas-based public company that owns the TaxAct tax prep software business as well as the Avantax financial planning and wealth management business, said Tuesday it is selling TaxAct to an affiliate of Cinven, a U.K.-based private equity fund, for $720 million in cash.

Following completion of the deal, which is expected to close by the end of the year, Blucora plans to rebrand as Avantax and focus on providing tax-focused wealth management through its independent broker-dealer, Avantax Wealth Management, and its employee-based registered investment advisor, Avantax Planning Partners.

TaxAct has changed hands before. Online search provider InfoSpace bought the company in January 2012 from 2nd Story Software for $28.7 million in cash and rebranded in June of that year as Blucora. Blucora later acquired two financial planning providers that do business with CPA firms, HD Vest and 1st Global. Blucora first acquired HD Vest in 2015 for $580 million and 1st Global in March 2019 for $180 million. In September 2019, the two were rebranded as Avantax Wealth Management.

"The TaxAct transaction and value it will deliver to shareholders are the direct result of our team's significant efforts to provide customers with the best full-featured value offering in the tax software space," said Blucora president and CEO Chris Walters in a statement Tuesday. "TaxAct's accomplishments over the past few years have been remarkable. Net promoter scores and retention rates have increased as we have invested in product and customer care enhancements, inclusive of free access to tax experts. This, coupled with strong marketing and partnership execution, has enabled the business to deliver strong financial performance and return to growing market share. We believe that Cinven will provide the business and its talented team the opportunity to continue to serve customers and grow revenue as a more scaled software-only business."

As a pure-play wealth management firm, he anticipates Avantax will streamline its operations and cost structure to generate more revenue growth and expand its margins. Blucora expects the transaction to deliver after-tax net cash proceeds of approximately $620 million.

Centerview Partners and PJT Partners acted as financial advisors to Blucora on the deal, and Haynes and Boone and Sidley Austin served as legal advisors.