Consumer tax services provider H&R Block (HRB) agreed yesterday to purchase Wave Financial, a Canada-based accounting software provider backed by financial services firms National Australia Bank and Royal Bank of Canada (RBC), for $405m.
The all-cash transaction is expected to conclude within the next few months. Wave’s leadership team, including co-founder and chief executive Kirk Simpson, will continue to operate independently, from its headquarters in Toronto.
Founded in 2009, Wave has developed a cloud-based platform that enables entrepreneurs and small businesses to manage all aspects of accounting, including invoicing and receipt-tracking, as well as payment processing, payroll and bookkeeping services.
The company currently serves more than 400,000 clients across the world. HRB expects the acquisition to strengthen its position in the small business market.
Wave most recently collected $24m in funding in 2017, when National Australia Bank and RBC contributed to a round together with Portag3, the financial services-focused investment unit formed by financial conglomerate Power Corporation.
The 2017 round also featured OurCrowd, CRV, Social Capital and HarbourVest as well as BDC IT Venture Fund and BDC Capital, both investment vehicles for the state-owned Business Development Bank of Canada, and Omers Ventures, the investment unit of pension fund Ontario Municipal Employees Retirement System.
BDC IT Venture Fund, HarbourVest, CRV and Social Capital had already provided $11.3m in funding for the company in 2016, though it remains unclear whether that constituted a separate investment or the first close of the aforementioned round.
Wave had closed a $10m series C round in 2015 that included an unnamed financial technology software developer, Omers Ventures, CRV and Social Capital. It followed $6m in funding in 2013, according to a regulatory filing.
Social Capital, Omers Ventures and CRV supplied $12m in series B capital for Wave in 2012, after the latter two had already taken part in a $5m series A round in 2011. Inkef Capital, a joint venture between Omers and pension fund ABP, had injected $1.5m in seed capital earlier the same year.
