Tax Software Provider Avalara (AVLR) Said Targeted in Takeover by P/E Firm Vista Equity Partners - Source

July 7, 2022 12:51 PM EDT

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Avalara, Inc. (NYSE: AVLR) is said to have been approached about a potential takeover from private equity firm Vista Equity Partners, according to a source. Both sides are said to be working with investment banking advisors but it is unclear how advanced the talks are, or if they will lead to a deal.

Avalara is a cloud-based tax compliance automation service for enterprise clients and Vista Equity owns a portfolio of enterprise software companies.

The valuation of Avalara is just under $7 billion, but had been as high as nearly $17 billion in the fall of 2021 before multiple compression hit all enterprise software names.

In the first quarter of 2022, the company posted revenue growth of 33% to $204.5 billion and 71% gross margin. The company posted a loss in the quarter and is projecting losses for the rest of 2022.

Overall, Wall Street analysts are very bullish on the stock with 17 Buy ratings versus 1 Neutral rating. The average Wall Street price target of about $146, suggesting 90% upside. The company is seen as a long-term winner in the approximate $15 billion tax determination and compliance market with near-term growth tailwinds from the Supreme Court Wayfair ruling on sales tax.

Avalara said they don’t comment on rumors and Vista Equity has not responded to a request to comment.

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