Vista Equity Partners acquires Avalara, Inc. (2022)

Deal facts

Buyer: Vista Equity Partners
Target: Avalara, Inc.
Deal value: Not disclosed
Announced: 8 August 2022
Status: Completed
Sector: Technology
Country: United States
Consideration: cash

Sources

SEC_EDGAR_8K

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Deal timeline

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19 Oct 2022CompletedClosed
Vista Equity Partners completes acquisition of Avalara, Inc.
Introductory Note This Current Report on Form 8-K is being filed in connection with the completion of the previously announced Merger (as described below) pursuant to that certain Agreement and Plan of Merger, dated as of August 8, 2022 (the “ Merger Agreement ”), by and among Avalara, Inc., a Washington corporation (“ Avalara ” or the “ Company ”), Lava Intermediate, Inc., a Delaware corporation
Source

OpinionExit Mode editorial

We see a clear signal in the move by Vista Equity Partners to take Avalara, Inc private. This transaction, announced on 8 August 2022 and now completed, removes a technology leader from public markets. The deal structure is straightforward yet decisive. The buyer has offered cash consideration to acquire the entire company. This going-private route allows the target to step away from the relentless pressure of quarterly earnings calls and short-term market sentiment. For the SME founder watching from the sidelines, this serves as a potent reminder that public listing is not the only path to scale or liquidity.

The choice of an all-cash deal by a specialist private equity firm suggests a specific strategic intent. Vista Equity Partners typically targets software and technology assets where they can drive operational efficiency and consolidate market position. By paying in cash, the buyer eliminates the uncertainty of share-based valuations for the sellers. This creates a clean break for the target shareholders. However, the mechanics of such a transaction often involve rigorous due diligence and strict change-of-control covenants. In the technology sector, these deals frequently trigger regulatory reviews, particularly if the combined entity approaches significant market share thresholds that could attract antitrust scrutiny from bodies like the CMA or equivalent US authorities. While this deal closed, the path to completion requires navigating these complex compliance landscapes without delay.

Our view is that the going-private trend in the technology sector offers a viable alternative for founders who feel their public company status hinders long-term investment. The cash consideration provides immediate certainty, a stark contrast to the volatility of public markets. Yet, the trade-off is the loss of public capital access and the imposition of private equity governance. Founders must weigh the freedom to execute a multi-year strategy against the constraints of debt covenants and exit timelines. The decision to go private is rarely about valuation alone; it is about the operating environment required to build the next phase of the business.

For the founder-reader evaluating their own exit options this week, review your current change-of-control covenants and debt agreements. Identify any clauses that might restrict a sale to a private equity buyer or trigger immediate repayment upon a change in ownership. Understanding these contractual constraints now will prevent them from becoming a deal-breaker when you are ready to negotiate.

Editorial opinion. Not financial or legal advice.

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