Upon closing of the transaction, the UK-based private equity firm will combine the business of TaxAct with Drake Software, which is another tax preparation software company in which Cinven invested, under a single holding company
Cinven has agreed to acquire American digital tax filing assistance software and services company TaxAct in a deal worth around $720m.
Upon closing the transaction, the UK-based private equity firm will combine TaxAct’s business with Drake Software, which is another tax preparation software company.
Cinven made an undisclosed investment in the North Carolina-based Drake Software in 2021.
Cinven partner Chris Good said: “Since investing in Drake in 2021, Cinven has set out to support the Company’s growth plans, including expanding its presence in the professional tax preparation market, renewing its technology platform and enhancing its product offerings for the benefit of Drake’s tax professional customers.
“The addition of TaxAct’s consumer tax preparation platform will further strengthen Drake’s capabilities to anticipate and serve the needs of all types of customers as today’s tax landscape becomes increasingly sophisticated.”
According to Cinven, the acquisition of TaxAct and the subsequent combination with Drake Software will help it build a full-service tax ecosystem provider.
The resulting single holding company is expected to leverage the resources and shared principles of the combined tax software firms to innovate and underpin their complementary individual tax filer and professional tax preparer customer bases.
Founded in 1998, TaxAct is claimed to be the first online software provider to provide free tax filing services. The company is said to have provided do-it-yourself (DIY) tax filing services to over 85 million individual filers to date.
Cinven senior principal Daniel Garin said: “This acquisition allows Cinven to back two leading management teams, building a stronger combined company that can win in an attractive market with substantial potential for future growth.
“We are excited to bring together two industry-leading, complementary businesses with shared values and a collective vision for delighting customers through product innovation and exceptional customer service.”
On closing of the deal, Curtis Campbell will continue leading the TaxAct business and Dom Morea will continue to serve as the president and CEO of Drake Software.
The companies will remain to operate under their own brands within the holding company.
The acquisition, which is subject to regulatory approvals and other customary conditions, is anticipated to close by the end of this year.