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Industry Spotlight > Mergers and Acquisitions

Blucora to Change Its Name, Sell TaxAct Software Business

By Jeff Berman

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What You Need to Know

  • Blucora agreed to sell TaxAct, its tax software business, for $720 million.
  • Blucora will focus on its IBD, Avantax Wealth Management, and its RIA, Avantax Planning Partners.

Blucora announced Tuesday that it agreed to sell TaxAct, its tax software business, to an affiliate of private equity firm Cinven for $720 million in cash, subject to adjustment.

The transaction is expected to close by the end of 2022, subject to customary closing conditions and regulatory approvals, Blucora said.

Following completion of the transaction, Blucora said, it will rebrand as Avantax and focus on its success in providing tax-focused wealth management via its independent broker-dealer  Avantax Wealth Management, and its employee-based RIA, Avantax Planning Partners.

During Blucora’s earnings call for the third quarter (ended Sept. 30), Chris Walters, the firm’s CEO and president, told analysts: “While the decision to sell TaxAct may come as a bit of a surprise for some of you, the [Blucora] board has been consistent in its position to remain open to opportunities to create or unlock value for shareholders.”

Blucora “commenced the process to explore such a transaction, and Cinven’s offer validates the … work our TaxAct team has done to grow the business by enhancing our products and customer care approach as well as the significant strides made acquiring customers via increasing the sophistication of our marketing efforts and scaling partnerships.”

The company has “invested in product and customer care enhancements,” he said in the news release announcing the transaction. “This, coupled with strong marketing and partnership execution, has enabled the business to deliver strong financial performance and return to growing market share,” he said.

“We believe that Cinven will provide the business and its talented team the opportunity to continue to serve customers and grow revenue as a more scaled software-only business,” he added.

As a “pure-play” wealth management company, meanwhile, Blucora will “streamline its operations and cost structure,” allowing the wealth business to invest further in areas that “will generate strong revenue growth and expand its margins,” Blucora said in a statement.

“The decision to focus the company on its wealth business and monetize the value of TaxAct reflects Blucora’s disciplined stewardship of shareholder capital,” Georganne Proctor, Blucora chair, said in the statement. “Closing the transaction will enable Blucora to immediately pay down debt and return excess capital to shareholders, allowing Blucora to continue investing into Avantax to fuel organic growth.”

Blucora’s Avantax Wealth Management and Avantax Planning Partners brands have with a collective $72.6 billion in total client assets as of Sept. 30, it said.

(Image: Shutterstock)

Jeff Berman

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