In 2014, Warburg Pincus invested in Avalara, a leading software-as-a-service provider of sales and use tax compliance and increased its ownership through multiple follow-on investments over time, becoming the largest shareholder. Avalara offers solutions that automate the processes of determining taxability, identifying applicable tax rates, collecting taxes, preparing and filing returns, remitting taxes, maintaining tax records, and managing compliance documents. The Avalara platform is designed to manage the complicated and burdensome tax compliance obligations imposed by state, local and other taxing authorities in the United States and internationally. Following the initial investment, Warburg Pincus worked closely with the company to implement several value-add initiatives. The Warburg Pincus team aided Avalara to source, diligence, and execute multiple acquisitions (as well as providing capital to fund the acquisitions), including Eztax, HotSpotTax, and KeepTrue, among others. Furthermore, Warburg Pincus and its advisors were actively involved in helping the management team develop strategies to expand the company’s product portfolio, cross-sell additional modules to Avalara’s client base, move up-market to penetrate the enterprise customer segment, enhance international capabilities, and add niche domain-specific content. In addition, Avalara’s management utilized Warburg Pincus’ capital markets expertise to help guide the business through a successful IPO process on the New York Stock Exchange, with the offering receiving significant interest from institutional investors. The Avalara investment demonstrates Warburg Pincus’ capital markets capabilities, strong record of supporting founder-run businesses, flexibility to invest in minority positions, and deep capital base to enable expansive M&A initiatives. Warburg Pincus exited the investment in 2019 through a series of public market sales of Avalara shares on the NYSE.
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