Thomson Reuters has signed a formal agreement to acquire SurePrep, which provides tax automation solutions.
By buying SurePrep, Thomson Reuters will add software and services such as 1040Scan, SPbinder and TaxCaddy, which leverage artificial intelligence to automate the collection and processing of digital documents directly from clients, as well as automatically extracting and populating key data in the firm's tax compliance software.
Thomson Reuters and SurePrep have been partnering since April to provide complementary solutions for tax and accounting professionals. Thomson Reuters will continue its open ecosystem strategy after the acquisition of SurePrep, with the combined entity providing a foundation for accelerated investment in automation and customer experiences.
"Thomson Reuters sees significant value and opportunities in SurePrep," said Elizabeth Beastrom, president of tax and accounting professionals at Thomson Reuters, in a statement. "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."
Under the agreement, Thomson Reuters will buy SurePrep for $500 million in cash. The acquisition is expected to generate approximately $60 million of revenue in 2022 and grow in excess of 20% annually in the next few years. Adjusted EBITDA is expected to be neutral in the first year, followed by annual increases thereafter, as integration costs subside and revenue scales. Acquired deferred revenue is expected to be a modest drag on free cash flow in the first year.
