Thomson Reuters Corp. today announced plans to acquire SurePrep LLC, a company with a suite of applications that accounting firms use to prepare taxes for clients.
The acquisition values SurePrep at $500 million. Thomson Reuters plans to finance the acquisition in cash and expects to receive a tax benefit worth about $60 million as part of the transaction. According to the companies, the transaction is set to close in the first quarter of 2023.
Toronto-based Thomson Reuters is the parent company of Reuters. It also sells software products that help legal and tax professionals carry out their day-to-day work more efficiently. Thomson Reuters says that its legal software is used by 85% of the companies on the Fortune 500 list, while its tax preparation applications have been adopted by 99% of the companies on the list.
Irvine, California-based SurePrep also has a substantial customer base. The company says that its tax preparation applications are used by more than 23,000 professionals at accounting firms and other companies to support their day-to-day work.
SurePrep’s applications focus on making it easier to collect and process the documents necessary to prepare a 1040 tax form. As part of its product portfolio, the company offers a cloud-based portal that accounting firms can use to collect tax-related documents from clients. The portal also offers several other features including the ability to make tax payments.
Another product, 1040SCAN, makes it easier for accounting firms to process the tax documents submitted by clients. The software automatically organizes submitted documents into folders to save time for users. Additionally, it uses machine learning to extract data from the documents and load the data into an accounting firm’s tax software.
SurePrep’s third product is a productivity tool called SPbinder. The tool enables tax professionals to attach notes to the documents they’re processing, highlight important parts of a form and access a built-in calculator.
“Thomson Reuters sees significant value and opportunities in SurePrep,” said Elizabeth Beastrom, the president of its tax and accounting professionals business. “The acquisition will support our strategy to empower tax and accounting professionals with the very best technology to simplify workflows, drive insights and improve efficiency.”
SurePrep is on track to generate about $60 million in revenue this year, Thomson Reuters disclosed today. SurePrep’s revenue is protected to grow at an annual rate of 20% for the next several years.
Thomson Reuters expects that the deal won’t substantially affect its adjusted EBITDA, or earnings before interest, taxes, depreciation and amortization, in the first 12 months after closing. Afterwards, SurePrep is expected to provide “annual increases” in adjusted EBITDA.