Tax software publisher CCH continued making an aggressive push into the small practitioner market, announcing its second major acquisition in as many months.The Wolters Kluwer business, which produces the ProSystem fx Office line of accounting and business software products, signaled its determination to take on the marketplace leader, Intuit Inc.'s QuickBooks, by striking a pact to purchase TaxWise Corp.
In the CPA space, TaxWise focuses on small firms that prepare simple personal returns and file them electronically.
Financial terms of the transaction, which also includes TaxWise's Rome, Ga., subsidiary Universal Tax Systems Inc., were not disclosed.
CCH president and chief executive Kevin Robert said that the Labor Day deal for TaxWise was one that had been previously attempted years earlier.
"I'm still not sure [how all the pieces] fell into place all at once," Robert said. "But it's an absolute home run for us. We've always considered there to be two premier players in the upper-end, small practitioner space."
The other player being, of course, ATX/Kleinrock, which CCH acquired in August.
Both TaxWise and ATX/Kleinrock provide tax and accounting software to small and midsized businesses across the country, and employ about 300 workers each. The companies will continue to be run as separate business lines, independent of the larger CCH software offerings, though Robert said that there would be a number of features that can naturally be incorporated across product suites. From the TaxWise line, Robert specifically mentioned its e-filing services and bank products.
TaxWise and UTS provide tax and accounting software solutions to nearly 9,300 CPAs, accounting professionals, enrolled agents and tax preparers across the country, and have annual revenues of approximately $53 million.
Similar to the ATX/Kleinrock deal, the acquisition will help CCH penetrate a market that was not suited to the specialized tax returns generated by the ProSystem fx application.
Both Robert and TaxWise CEO Bill Anderson stressed that the "value proposition" of the product would remain the same. "Price is an easy thing to focus on," Anderson said. "We've been the premium price in this segment, and we've backed that up with a high level of support. ... The most important thing for us has been taking that different approach to providing service to the customer."
For CCH, Robert said that the key remains continuing to learn faster than the competition. "That's the only competitive advantage in this business," he said. "From each of these businesses, we're going to be learning a lot from the team and from existing customers. From there, it's about applying that knowledge to get the right products and services to support our clients."
The TaxWise deal is still subject to a number of closing conditions, which should be completed before the end of the calendar year.
"There is a market down here that we've never been able to serve with our product line," Robert said, when the ATX/Kleinrock deal was announced in early August. Combined with TaxWise's customers, CCH will have a base of about 50,000 small-to-midsized practitioners using the accounting software of the two acquired companies.
TaxWise is actually the third acquisition of 2006 for CCH, which bolstered its paperless workflow process with the March purchase of a pair of automation tools from Bradenton, Fla.-based DocuMatters.
