Consumer tax solutions provider H&R Block is ramping up its position in the small business financial services market with the takeover of Wave.
In a deal announced Tuesday (June 11), H&R Block has acquired Wave Financial, a small business FinTech firm offering accounting, payroll, invoicing, payments and bookkeeping services. H&R Block said the acquisition will strengthen its position in the small business space and introduce new growth opportunities for the firm.
The deal was reached for $405 million in cash.
“Bookkeeping and cash flow management are significant pain points for small business owners and essential to successful annual tax preparation,” said H&R Block President and CEO Jeff Jones in a statement. “Wave addresses these concerns by delivering financial solutions and a simple user experience on a single platform.”
In addition, “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,” he said.
“Given the complementary strengthens 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 CEO and Co-Founder Kirk Simpson.
The companies expect to close the deal in the “next few months” pending regulatory clearance. H&R Block expects the takeover to generate as much as $45 million in revenue for the fiscal 2020 year. Wave will continue to operate as an independent entity within H&R Block.
The takeover follows just weeks after Wave announced a collaboration with Visa, which sees small businesses using Wave able to directly access Visa Direct and its Instant Payouts option to obtain funds from their sales in real time.
In 2017 Wave raised $24 million from investors at National Australia Bank, Royal Bank of Canada, Portag3 and Exhibition Capital, as well as existing backers.