Tax accounting software firm Avalara prepares IPO, say sources: Reuters

U.S. tax accounting software company Avalara Inc has interviewed banks to help prepare for an initial public offering (IPO) that could come in 2017 and value the company at roughly $1 billion, people familiar with the matter said on Friday.

Avalara’s offering would be another indication that the market for technology IPOs is thawing. Accounting software maker BlackLine Inc (BL.O) raised $146 million in an IPO in October, and is currently trading 45 percent above its IPO price.

Avalara has interviewed investment banks in recent days to hire underwriters for an IPO, the sources said, asking not to be named because the plans are not yet public. Avalara spokeswoman Sheri Renner declined to comment on “future financings.”

Software companies have raised $1.4 billion year to date through IPOs, down roughly 33 percent from this time last year, according to Thomson Reuters data. Silicon Valley Bank estimates only 15 IPOs in 2016 were backed by venture capital, but it expects 30 to 45 of these IPOs next year.

Founded in 2004, Avalara simplifies tax management through its cloud-based software that helps companies figure out how to comply with tax law in different jurisdictions. The Seattle-based company has raised more than $200 million in venture capital, including from Warburg Pincus, TCV, Sageview Capital and Battery Ventures. Warburg Pincus alone invested $100 million in the company in 2014.

Avalara has acquired more than a dozen companies, including, in 2013, PC Matrix Master, a database of tax information.

If the company also decides to explore a sale in parallel to an IPO it opens the door to private equity firms, which have shown an interest in buying tax compliance software in the past. HG Capital, for example, acquired Sovos Compliance, a tax compliance company owned by Vista Equity Partners, earlier this year.