Aug 8 (Reuters) - Avalara Inc said on Monday it has
agreed to be acquired by private equity firm Vista Equity
Partners in a deal that values the tax automation software
platform at $8.4 billion including debt, one of the largest
take-private deals this year as the M&A market slows down.
Vista managed to secure a $2.5 billion loan from private
lenders and bring in institutional investors as co-investors,
according to a source familiar with the matter.
Vista's offer of $93.50 per share, which marks a 2% discount
to Avalara stock's closing price on Friday, sent shares down
3.86% on Monday.
However, the price marked a 27% premium to the stock's close
on July 6, after which it surged nearly 30% on media reports of
a possible takeover.
Founded in 2004, Avalara runs a cloud-based software
platform that helps companies with tax compliance. The
Seattle-based company counts Pinterest Inc, Zillow
Group and Roku Inc among its customers.
Avalara went public in June 2018 and has benefited from the
digital transformation during the global pandemic, when more
businesses are turning to software tools to automate their tax
needs. This year, its shares have taken a hit, as have many
companies that previously prospered during the pandemic.
Private equity buyers have lately ramped up take-private
activities as valuations of public tech companies have dropped
due to a selloff triggered by high inflation and tightening
But a tougher environment for debt syndications has hindered
some buyers' ability to raise enough capital, and many sponsors
have turned to private lenders. Ping Identity, a
security firm that was taken private by Thoma Bravo in a $2.8
billion deal last week, also secured loans from direct lenders.
In the first half of the year, PE firms were the chief
drivers of global dealmaking even as overall M&A hit a road
Goldman Sachs & Co advised Avalara on the deal, which is
expected to close in the second half of 2022.
Vista, which focuses on investments in technology and
business software companies, managed nearly $96 billion in
assets as of March 31.
In January, the company teamed up with activist investment
firm Elliott Management for a $16.5 billion buyout of software
company Citrix Systems Inc. Banks that have provided
loans to the Citrix buyout are set to lose millions on the
syndications, sources told Reuters.
(Reporting by Niket Nishant and Eva Mathews in Bengaluru and
Krystal Hu in Los Angeles; Editing by Shailesh Kuber and Matthew