Seattle-based tax software company Avalara Inc. is urging shareholders to approve its proposed acquisition by private equity firm Vista Equity Partners.
The all-cash deal would take Avalara private four years after its initial public offering. Since the $8.4 billion acquisition was announced in August, multiple shareholder firms have declared their opposition to the sale and said they intend to vote against it.
In a presentation released Friday for shareholders and filed with the Securities and Exchange Commission, Avalara cited a litany of negative predictions for the company if it didn't accept the acquisition and instead tried to remain an independent company. Among the reasons listed was high attrition in sales and marketing that has caused its current sales slump.
Other reasons Avalara cited in the presentation included a "required U.S. (go-to-market) transformation to reaccelerate anemic demand generation," a "required evolution of the executive team to resolve execution challenges and transform operations" and a "need to guide down 2022 revenue expectations" after its Q2 earnings fell short of expectations.
Vista Equity is headquartered in Austin, Texas, and would pay $93.50 per share for Avalara, a 27% premium over the company's stock price at close July 6, the last day of trading before news reports began about a potential deal.
If approved, the companies expect the deal to close in the second half of this year.
Avalara also said the challenging macroeconomic environment makes the Vista Equity acquisition appealing. As for Avalara's international business, the company said it would need a multiyear rebuild due to "missed product execution" and "weak (go-to-market) execution," among other factors.
Avalara, founded in 2004, makes software for sales and use tax, consumer use tax and international compliance. Avalara's clients include Zillow, Pinterest and Converse, and the company had 4,465 full-time employees at the end of 2021, according to a filing with the SEC.
According to the presentation, Avalara's board held 11 meetings over more than three months during the acquisition vetting process. Seven parties made it to initial diligence and management meetings after the company's board approved outreach to potential investors on May 19.
Vista and Avalara began negotiating the price per share in June before reaching an agreement Aug. 5, according to the presentation. The special meeting for shareholders is Oct. 14.
