4 things to know about the $720M TaxAct acquisition

Private equity firm Cinven is acquiring tax preparation software company TaxAct, plans to merge it with Drake Software

Image by Mohamed Hassan from Pixabay (With added purple filter)

Private equity firm Cinven today announced it is acquiring US-based tax preparation software TaxAct for approximately $720 million.

Here are four key points:

• TaxAct was founded in 1998 (it was known as “2nd Story Software” back then). It’s a significant player on the DIY tax prep software market with 85 million individual filers to date. Furthermore, it was the first online software provider to offer free tax filing services.

• In 2010, H&R Block announced it would pay $287.5 million in cash to acquire the then parent company of TaxAct (TA Associates). However the following year, the acquisition process was terminated by both parties due to an antitrust lawsuit from the U.S. Department of Justice.

• Cinven intends to bring TaxAct together with portfolio company Drake Software (another major tax prep software player) under a single holding company. The two businesses would continue to operate under their own brands.

• The transaction is expected to close by the end of 2022 pending regulatory approvals.

I think it’s an interesting development but another antitrust pushback wouldn’t be completely crazy at this point.