Seattle-based tax software company Avalara (NYSE: AVLR) has picked up its already-rapid pace of its acquisitions recently.
Ross Tennenbaum, chief financial officer at Avalara, said the company normally does about three acquisitions each year. In the past year, though, Avalara has acquired six companies, including three since the start of October. For Tennenbaum and Avalara, acquisitions help the company future-proof its business.
"We typically get into new areas starting with M&A," Tennenbaum said. "Our sales tax returns business, which is our second-largest product line, started with M&A. Our certificate management business, which is our third-largest product line, started with M&A."
According to Tennenbaum, Avalara generally uses acquisitions to find companies doing something Avalara wants to offer clients.The CEOs or founders at those companies are often experts in those businesses, and Avalara can then use its firepower as a large, publicly traded company to grow those businesses to new heights post-acquisition, he said.
As for what happens to the teams at these acquired companies, Tennenbaum added that Avalara actually wants to grow the teams and invest in their employees. Avalara focuses on giving these acquired companies a boost to their marketing and integrating their technology, he said.
Avalara was founded in 2004 and went public in 2018. The company offers compliance products and services in sales and use tax, consumer use tax and international tax. According to a filing with the Securities and Exchange Commission, Avalara had 3,351 total full-time employees at the end of last year. The company's clients include Zillow, Pinterest and Converse.
Since the start of October, Avalara has acquired the e-filing company Track1099, the property tax software company CrowdReason LLC and the commodity classification company 3CE Technologies. Avalara acquired Davo Technologies and Inposia in April, and it acquired Impendulo Limited in December 2020. The company hasn't disclosed the financial terms of any of the deals.
Avalara Chief Operating Officer Amit Mathradas previously told the Business Journal that acquisitions naturally lead to some employees moving to Seattle to be near the "nerve center." Tennenbaum said although this is true, Avalara is more focused on training and development than who is working where, given the Covid-19 pandemic.
He said Avalara looks at companies of all sizes and geographies when targeting acquisitions.
"In the European area, there's a lot of movement to, 'How do we get more real-time compliance?'" Tennenbaum said. "A lot of how you're going to do that is getting more content, getting more integrations and getting more technology. Some of that we will build, but I would expect there are good opportunities out there to acquire some of those."
