Wolters Kluwer buys XCM Solutions

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Wolters Kluwer Tax & Accounting has inked a deal to buy XCM Solutions, a cloud-based workflow solutions provider for professional tax and accounting firms. The acquisition offers integration opportunities with CCH Axcess, Wolters Kluwer’s cloud-based software suite for professional firms.

The transaction is expected to close in the next few weeks, once the usual closing conditions have been met. Specific terms of the deal were not disclosed, but the companies said the deal values XCM at $161.4 million.

XCM recorded revenues of approximately $22.5 million in calendar year 2019, with roughly three-quarters of that coming from cloud-based software. The company also provides outsourcing and technology-enabled services to support clients during the tax season. Headquartered in Quincy, Massachusetts, it has approximately 440 employees located in the U.S. and India.

Wolters Kluwer expects the acquisition to achieve a return on invested capital above after-tax weighted average cost of capital (8 percent) within three to five years.

“Our longstanding business relationship make this combination a natural evolution. Firms are seeking solutions that will allow them to modernize their workflows to remain profitable, to attract talent, and to better meet clients’ expectations beyond tax compliance work. With this acquisition and our CCH Axcess Platform, we can even better serve their needs,” said Jason Marx, president and CEO, Wolters Kluwer Tax & Accounting North America, in a statement Monday. “XCM also offers technology-enabled accounting and tax outsourcing services, which will be a great complement to the services we provide Wolters Kluwer customers today.”

“We are very excited by the opportunity to join Wolters Kluwer,” added Glen Keenan, CPA, president and chief operating officer of XCM Solutions. “XCM customers will benefit not just from the leadership and domain expertise of Wolters Kluwer but also from their demonstrated commitment to serve customer needs through sustained investment in product enhancement and innovation.”

Wolters Kluwer has had a strategic partnership with XCM Solutions since 2006, allowing firms to integrate XCM workflow tools with CCH ProSystem fx on-premise software and, since 2012, with CCH Axcess, their cloud-based, modular software platform.

The two companies share another connection, as XCM CEO Mike Sabbatis previously served as president and CEO of CCH Tax and Accounting North America from 2006 to 2012. Prior to that, he was global head of sales and marketing.

Founded in 2002 out of an accounting firm in Massachusetts, XCM counts firms of all sizes across the U.S. and Canada among its customers, with solutions that address workflow processes across a range of practice areas. The company’s main product is XCMworkflow, a cloud-based system built to align with a firm’s existing systems and help them manage all types of work across multiple clients, projects, and offices.

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Wolters Kluwer Tax & Accounting M&A