Blucora, Inc. (“Blucora” or the “Company”) (NASDAQ: BCOR) today
announced that it has agreed to sell TaxAct, its tax software
business. Under the terms of the transaction, an affiliate of
Cinven will purchase TaxAct for $720 million in cash, subject to
adjustment. The transaction is expected to close by the end of
2022.
“The TaxAct transaction and value it will deliver to
shareholders are the direct result of our team’s significant
efforts to provide customers with the best full-featured value
offering in the tax software space. TaxAct’s accomplishments over
the past few years have been remarkable. NPS scores and retention
rates have increased as we have invested in product and customer
care enhancements, inclusive of free access to tax experts. This,
coupled with strong marketing and partnership execution, has
enabled the business to deliver strong financial performance and
return to growing market share,” said Chris Walters, President and
Chief Executive Officer. “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.
Following completion of the transaction, Blucora will rebrand as
Avantax and focus on its success in providing tax-focused wealth
management through its independent broker dealer (IBD), Avantax
Wealth Management, and its employee-based registered investment
advisor (RIA), Avantax Planning Partners.
As a pure-play wealth management company, 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. Overall, the Company is
expected to benefit from:
- A capital structure well-suited to invest in high-return
initiatives, including:
- Building upon its successful recruiting efforts to attract new
assets, Financial Professionals and accounting firms;
- Growing its RIA through on-platform firm acquisitions; and
- Creating best-in-class technology tools to meet the needs of
financial professionals and clients.
- Enhanced returns on assets (ROAs) in a rising rate
environment.
The Company will continue to execute its differentiated
tax-focused wealth management strategy that has delivered
impressive results over the last few years including:
- Dramatically increased Financial Professional
satisfaction;
- Exceptionally high production retention rates;
- Multiple quarters of positive net flows; and
- Sustained shifts toward advisory assets and its higher-margin
employee-based RIA.
“Completing this transaction will allow us to return significant
capital to our shareholders and enable us to focus on our wealth
management business and its extraordinary community of Financial
Professionals and accounting firms. Avantax has grown significantly
over the last four years, and we are confident in our ability to
deliver holistic, tax-focused financial planning and investment
solutions, while also generating superior returns for
shareholders,” said Walters.
Over the medium term, Blucora expects its pure-play
broker-dealer and wealth management solutions business will
achieve:
- 8.5% to 11% organic revenue CAGR;
- Strong positive net flows; and
- Adjusted EBITDA margins in 16-18% range
“The decision to focus the Company on its wealth business and
monetize the value of TaxAct reflects Blucora’s disciplined
stewardship of shareholder capital. Closing this transaction will
enable the Company to immediately pay down debt and return excess
capital to shareholders, allowing Blucora to continue investing
into Avantax to fuel organic growth,” said Georganne Proctor,
Blucora’s Chair of the Board.
The transaction is subject to customary closing conditions and
regulatory approvals. The closing of the transaction is not subject
to any financing condition. Blucora expects the transaction to
deliver after-tax net cash proceeds of approximately $620
million.
Blucora will host a conference call at 8:30 a.m. Eastern Time
today to discuss the transaction, its strategic transformation,
third quarter results and its outlook for full year 2022. This call
will be webcast and can be accessed within the Investor Relations
section of the Blucora corporate website at www.blucora.com.
Advisors
Centerview Partners LLC and PJT Partners are acting as financial
advisors and Haynes and Boone, LLP and Sidley Austin LLP are
serving as legal advisors to Blucora.
About Blucora®
Blucora, Inc. (NASDAQ: BCOR) is a provider of data and
technology-driven solutions that empower people to improve their
financial wellness. Blucora operates in two segments (i) wealth
management, through its Avantax Wealth Management and Avantax
Planning Partners brands, with a collective $72.6 billion in total
client assets as of September 30, 2022, and (ii) tax software,
through its TaxAct business, a tax software company with over 3
million consumer users and approximately 21,000 professional users
in 2022. For more information on Blucora, visit
www.blucora.com.
About Avantax Wealth Management®
Avantax Wealth Management® offers a tax-advantaged approach for
comprehensive financial planning. Avantax’s Tax-Smart approach
helps clients leverage taxes to create financial growth
opportunities. Most financial companies treat taxes as an
afterthought, or not at all, even though taxes are one of life’s
most complex and costly expenses. Avantax technology, tax and
wealth management insights are used by Avantax Financial
Professionals to uncover and tailor opportunities across their
clients’ financial lifecycles to help enable better long- term
outcomes. The wealth management segment of Blucora, Inc. (NASDAQ:
BCOR), which includes the Avantax Wealth Management® and Avantax
Planning Partners℠ brands, had a collective $72.6 billion in total
client assets as of September 30, 2022. For more information,
please visit us at www.avantax.com or on LinkedIn and
Facebook.
About Avantax Planning Partners℠
Avantax Planning Partners℠ is an employee-based RIA (registered
investment advisor), insurance agency, and wealth management
business that partners with CPA firms to provide their consumer and
small-business clients with holistic financial planning and
advisory services, as well as retirement plan solutions through
Avantax Retirement Plan Services. Avantax Planning Partners and CPA
firms help clients pursue their financial goals through strategies
such as asset management, estate planning, retirement planning, tax
planning, risk management and more. The wealth management segment
of Blucora, Inc. (NASDAQ: BCOR), which includes the Avantax
Planning Partners℠ and Avantax Wealth Management® brands, had a
collective $72.6 billion in total client assets as of September 30,
2022. For more information, please visit us at www.avantax.com or
on LinkedIn and Facebook.
Forward-Looking Statements
This release contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended,
including without limitation, statements regarding the anticipated
timing of the consummation of the sale of our tax software business
(the “TaxAct Sale”), the expected benefits of the TaxAct Sale, the
plan for Blucora to change its name to Avantax, the anticipated
business strategy and corporate focus of Blucora following
consummation of the TaxAct Sale, the expected benefits of operating
as a pure-play wealth management company following consummation of
the TaxAct Sale, the expected after-tax proceeds from the TaxAct
Sale and the intended use of such proceeds, and the expected
revenue and client asset growth rate and expected EBITDA margins
for the wealth management business following the consummation of
the TaxAct Sale. Forward-looking statements provide current
expectations of future events based on certain assumptions and
include any statement that does not directly relate to any
historical or current fact. Forward-looking statements can also be
identified by words such as “anticipates,” “believes,” “plans,”
“expects,” “future,” “intends,” “may,” “will,” “would,” “could,”
“should,” “estimates,” “predicts,” “potential,” “continues,”
“target,” “outlook,” and similar terms and expressions, but the
absence of these words does not mean that the statement is not
forward-looking. Actual results may differ significantly from
management’s expectations due to various risks and uncertainties
including, but not limited to: our ability to effectively compete
within our industries; our ability to generate strong performance
for our clients and the impact of the financial markets on our
clients’ portfolios; our expectations concerning the revenues we
generate from fees associated with the financial products that we
distribute; our ability to attract and retain financial
professionals, employees, clients, and customers, as well as our
ability to provide strong customer/client service; our future
capital requirements and the availability of financing, if
necessary; our ability to meet our current and future debt service
obligations, including our ability to maintain compliance with our
debt covenants; any downgrade of the Company’s credit ratings; the
impact of new or changing legislation and regulations (or
interpretations thereof) on our business, including our ability to
successfully address and comply with such legislation and
regulations (or interpretations thereof) and increased costs,
reductions of revenue, and potential fines, penalties, or
disgorgement to which we may be subject as a result thereof; risks,
burdens, and costs, including fines, penalties, or disgorgement,
associated with our business being subjected to regulatory
inquiries, investigations, or initiatives, including those of the
Financial Industry Regulatory Authority, Inc. and the Securities
and Exchange Commission (the “SEC”); risks associated with legal
proceedings, including litigation and regulatory proceedings; our
ability to close, finance, and realize all of the anticipated
benefits of acquisitions, as well as our ability to integrate the
operations of recently acquired businesses, and the potential
impact of such acquisitions on our existing indebtedness and
leverage; our ability to retain employees and acquired client
assets following acquisitions; any compromise of confidentiality,
availability or integrity of information, including cyberattacks;
our ability to manage leadership and employee transitions,
including costs and time burdens on management and our board of
directors related thereto; political and economic conditions and
events that directly or indirectly impact the wealth management and
tax software industries; the impact of the continuing COVID-19
pandemic on our results of operations and our business, including
the impact of the resulting economic and market disruption, the
extension of tax filing deadlines and other related government
actions, and changes in customer behavior related to the foregoing;
our ability to maintain our relationships with third-party
partners, providers, suppliers, vendors, distributors, contractors,
financial institutions, industry associations, and licensing
partners, and our expectations regarding and reliance on the
products, tools, platforms, systems, and services provided by these
third parties; our ability to respond to rapid technological
changes, including our ability to successfully release new products
and services or improve upon existing products and services; risks
related to goodwill and acquired intangible asset impairment; our
ability to develop, establish, and maintain strong brands; risks
associated with the use and implementation of information
technology and the effect of security breaches, computer viruses,
and computer hacking attacks; our ability to comply with laws and
regulations regarding privacy and protection of user data; the
seasonality of our business; our assessments and estimates that
determine our effective tax rate; our ability to protect our
intellectual property and the impact of any claim that we infringed
on the intellectual property rights of others; disruptions to our
business and operations resulting from our TaxAct Sale agreement
(or the announcement thereof); our inability to successfully close
the TaxAct Sale in a timely manner or at all due to the failure to
satisfy the conditions precedent to the consummation of the
transaction, including, without limitation, the receipt of
regulatory approval; our failure to realize the expected benefits
of the TaxAct Sale if it does close; our inability to return
capital to stockholders in the amount anticipated if we are unable
to secure financing on desirable terms after the consummation of
the TaxAct Sale; and the effects on our business of actions of
activist stockholders. A more detailed description of these and
certain other factors that could affect actual results is included
in Blucora’s most recent Annual Report on Form 10-K and most recent
Quarterly Report on Form 10-Q filed with the SEC and reflect our
good faith beliefs, assumptions, and expectations but are not
guarantees of future performance or events. Readers are cautioned
not to place undue reliance on these forward-looking statements,
which speak only as of the date hereof. The Company undertakes no
obligation to update any forward-looking statements to reflect
events or circumstances after the date hereof, except as may be
required by law.
Investors:Dee LittrellInvestor Relations(972)
870-6463ir@blucora.com
Media:Gagnier CommunicationsDan Gagnier (646)
569-5897blucora@gagnierfc.com
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