Thomson Reuters Corp. today announcement plans to acquire SurePrep LLC, a company with a suite of applications accounting firms use to prepare clients’ taxes.
The acquisition values SurePrep at $500 million. Thomson Reuters expects to finance the acquisition in cash and expects to receive a tax benefit of approximately $60 million as part of the transaction. According to the companies, the transaction is expected 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 do their day-to-day work more efficiently. Thomson Reuters says its legal software is used by 85% of Fortune 500 companies, while its tax preparation apps have been adopted by 99% of companies on the list.
SurePrep, based in Irvine, Calif., also has a large customer base. The company says its tax preparation apps are used by more than 23,000 professionals at accounting firms and other businesses to support their daily work.
SurePrep’s applications aim to facilitate the collection and processing of documents needed 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 documents from clients. The portal also offers several other features, including the ability to make tax payments.
Another product, 1040SCAN, facilitates the processing of tax documents submitted by clients for accounting firms. The software automatically organizes submitted documents into folders to save users time. Additionally, it uses machine learning to extract data from documents and load the data into an accounting firm’s tax software.
SurePrep’s third product is a productivity tool called SPbinder. The tool allows tax professionals to attach notes to documents they process, highlight important parts of a form, and access an integrated calculator.
“Thomson Reuters sees significant value and opportunity in SurePrep,” said Elizabeth Beastrom, president of its tax and accounting professionals business. “The acquisition will support our strategy to equip tax and accounting professionals with the best technology to simplify workflows, generate insights and improve efficiency.”
SurePrep is on track to generate approximately $60 million in revenue this year, Thomson Reuters revealed today. SurePrep’s revenues are protected to grow at an annual rate of 20% over the next several years.
Thomson Reuters expects the deal will not materially affect its adjusted EBITDA, or earnings before interest, taxes, depreciation and amortization, in the first 12 months after closing. Thereafter, SurePrep is expected to provide “annual increases” in Adjusted EBITDA.