- H&R Block has announced it is acquiring Toronto, Ontario-based Wave Financial for $405 million (C$537 million) in cash.
Wave Financial — a company that provides accounting, invoicing, payroll, and payments software, and bookkeeping — has created a comprehensive platform used by more than 400,000 small businesses every month. And recently consumer tax services provider H&R Block, Inc. announced it is entering a definitive agreement to acquire Toronto, Ontario-based Wave Financial for $405 million (C$537 million) in cash.
How does Wave work? Wave offers its accounting, invoicing, and receipt tracking software for free. And it generates revenue by offering payroll services, payment processing, and bookkeeping services. And all of these products and services are offered through a platform that is used by more than 400,000 small businesses every month.
“I’m extremely excited to welcome Wave, an innovative company with an outstanding team, to H&R Block,” said H&R Block president and CEO Jeff Jones. “Bookkeeping and cash flow management are significant pain points for small business owners and essential to successful annual tax preparation. Wave addresses these concerns by delivering financial solutions and a simple user experience on a single platform. Wave provides us the opportunity to accelerate our small business strategy and is a great strategic fit, as both companies can leverage each other’s capabilities to bring tax and financial solutions to small business owners, serving more clients in more ways.”
This acquisition expands upon H&R Block’s product and client portfolio. Plus it enhances its position in the small business market and provides new growth opportunities as Wave’s disruptive pricing and low-cost customer acquisition model resulted in rapid organic growth.
“Given the complementary strengths of these two great companies and our shared vision of providing financial help to people who need it, we’re delighted to be joining the H&R Block team,” added Wave co-founder and CEO Kirk Simpson. “We are excited to work together to deliver additional value to small businesses to help them succeed.”
As part of the deal, H&R Block is acquiring all outstanding shares of Wave. And this transaction is expected to close within the next few months subject to regulatory approval and customary closing conditions. Based on the expected timing of the closing, H&R Block is estimating that the transaction will generate $40 to $45 million of revenue for fiscal 2020.
After the transaction closes, Wave is going to maintain its leadership team and will operate independently within H&R Block from its headquarters in Toronto, Ontario.