Vertex Completes Acquisition of ecosio

Rhea-AI Summary

Vertex Inc. (NASDAQ: VERX) has completed the acquisition of ecosio, a leading B2B integration provider specializing in EDI and e-invoicing, on August 30, 2024. The acquisition includes an upfront cash payment of $69 million, with a targeted earn-out of $76 million in cash and $35 million in Vertex shares. This strategic move aims to integrate ecosio's e-invoicing capabilities with Vertex's indirect tax software platform, addressing the complex regulatory landscape for international companies handling Value Added Tax compliance and reporting.

The initial purchase price represents a five times revenue multiple based on ecosio's current revenue run rate. If all financial targets and earn-outs are achieved over the next three years, the terminal multiple will also be approximately five times revenue. Vertex will provide more details on the financial impact of the acquisition during its Q3 2024 financial results announcement in November.

Positive

• Acquisition of ecosio enhances Vertex's e-invoicing and B2B integration capabilities
• Strategic move to address complex regulatory landscape for VAT compliance and reporting
• Potential for revenue growth and market expansion
• Initial purchase price of $69 million represents a 5x revenue multiple

Negative

• Significant cash outlay of $69 million for the initial purchase
• Additional $111 million in potential earn-out payments over three years
• Potential dilution from $35 million in Vertex shares as part of the earn-out

Insights

Financial Analyst

The acquisition of ecosio by Vertex for an initial $69 million cash payment, with potential additional earn-outs, is a strategic move in the rapidly evolving e-invoicing landscape. The deal's structure, with a 5x revenue multiple based on ecosio's current run rate, aligns with typical SaaS company valuations. However, the total potential payout of $180 million ($69M upfront + $76M earn-out + $35M in shares) suggests high growth expectations.

This acquisition positions Vertex to capitalize on the increasing regulatory complexity in international VAT compliance and reporting. The integration of ecosio's e-invoicing capabilities with Vertex's tax software platform could lead to significant cross-selling opportunities and potential revenue synergies. Investors should watch for the financial impact details in Vertex's Q3 2024 earnings report to gauge the acquisition's immediate effect on the company's financials and growth trajectory.

Tech Expert

Vertex's acquisition of ecosio marks a significant step in the convergence of tax technology and e-invoicing solutions. This move addresses the growing demand for integrated solutions that can handle both complex tax calculations and the increasing regulatory requirements for electronic invoicing and reporting.

The integration of ecosio's EDI and e-invoicing capabilities with Vertex's indirect tax platform creates a comprehensive tax technology ecosystem. This could potentially streamline processes for multinational companies dealing with diverse tax regimes and Continuous Transaction Controls (CTC) requirements. The combined solution may offer enhanced real-time reporting capabilities and improved compliance accuracy, which are important in the evolving global tax landscape.

Investors should consider the long-term technological advantages this acquisition brings to Vertex, potentially strengthening its competitive position in the global tax software market.

Market Research Analyst

The acquisition of ecosio by Vertex is a strategic response to the rapidly growing e-invoicing market, driven by increasing government mandates and the need for digital transformation in financial processes. This move aligns with the global trend towards real-time tax reporting and the implementation of Continuous Transaction Controls (CTC) by tax authorities worldwide.

The deal expands Vertex's addressable market, particularly in Europe where e-invoicing adoption is more advanced. It also positions the company to capture market share in regions that are in the early stages of e-invoicing implementation. The integration of ecosio's B2B capabilities with Vertex's tax expertise creates a unique value proposition that could differentiate Vertex in a competitive landscape.

Investors should monitor how this acquisition impacts Vertex's market penetration in key regions and its ability to cross-sell to existing customers, as these factors will be important in realizing the full potential of this strategic move.

KING OF PRUSSIA, Pa., Sept. 04, 2024 (GLOBE NEWSWIRE) -- Vertex Inc. (NASDAQ: VERX) (“Vertex” or the “Company”), a leading global provider of indirect tax solutions, today announced that it has completed the acquisition of ecosio, a leading B2B integration provider specializing in electronic data interchange (EDI) and e-invoicing, as of August 30, 2024.

David DeStefano, CEO of Vertex, stated, “We welcome the ecosio team to the Vertex family. E-invoicing is going to change the way international companies handle Value Added Tax compliance and reporting. By integrating ecosio’s e-invoicing capabilities together with Vertex’s leading indirect tax software platform, we’re delivering a comprehensive tax technology solution that addresses the increasingly complex regulatory landscape faced by our customers worldwide.”

ecosio Managing Director Christoph Ebm added, “Joining Vertex was the next logical step in our growth and development. Together, we will help our customers simplify indirect tax compliance and streamline complex Continuous Transaction Controls as well as B2B integration requirements while expanding our addressable market.”

The acquisition includes an upfront cash payment of $69 million, as well as a targeted earn-out of $76 million in cash and $35 million of Vertex shares. The initial purchase price of $69 million was funded by Vertex with cash on hand and represents a five times revenue multiple based on ecosio’s current revenue run rate. If ecosio achieves all financial targets and earn-outs over the coming three years, the terminal multiple will also be approximately five times revenue.

Vertex will provide investors with additional details on the financial impact of the ecosio acquisition when it announces third quarter 2024 financial results in November.

Visit here to learn more about Vertex’s e-invoicing solution.

About Vertex

Vertex, Inc. is a leading global provider of indirect tax solutions. The Company’s mission is to deliver the most trusted tax technology enabling global businesses to transact, comply and grow with confidence. Vertex provides solutions that can be tailored to specific industries for major lines of indirect tax, including sales and consumer use, value added and payroll. Headquartered in North America, and with offices in South America and Europe, Vertex employs over 1,400 professionals and serves companies across the globe.

For more information, visit www.vertexinc.com or follow us on Twitter and LinkedIn.

Forward Looking Statements

Any statements made in this press release that are not statements of historical fact, including statements about our beliefs and expectations, are forward-looking statements and should be evaluated as such. Forward-looking statements include, among other things, statements about the anticipated benefits of the ecosio acquisition, as well as the information concerning possible or assumed future results of operations, including descriptions of our business plan and strategies. Forward-looking statements are based on Vertex management’s beliefs, as well as assumptions made by, and information currently available to, them. Because such statements are based on expectations as to future financial and operating results and are not statements of fact, actual results may differ materially from those projected. Factors which may cause actual results to differ materially from current expectations include, but are not limited to: the outcome of any legal proceedings, regulatory proceedings or enforcement matters that may be instituted relating to the acquisition; the costs incurred to consummate the ecosio acquisition; the possibility that the expected benefits from the acquisition will not be realized, or will not be realized within the expected time period; difficulties related to the integration of the two companies; disruption from the ecosio acquisition making it more difficult to maintain relationships with customers, employees, regulators or suppliers; the diversion of management time and attention on the anticipated acquisition; adverse changes in the markets in which Vertex and ecosio operate; our ability to sustain and expand revenues, maintain profitability, and to effectively manage our anticipated growth; our ability to maintain and expand our strategic relationships with third parties; and the other factors described under the heading “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 as filed with the Securities Exchange Commission (“SEC”), as may be subsequently updated by our other SEC filings. Copies of such filings may be obtained from the Company or the SEC.

All forward-looking statements reflect our beliefs and assumptions only as of the date of this press release. We undertake no obligation to update forward-looking statements to reflect future events or circumstances.

Contacts:

Investor Relations contact:
Joe Crivelli
Vertex, Inc.
ir@vertexinc.com

Media contact:
Rachel Litcofsky
Vertex, Inc.
mediainquiries@vertexinc.com

FAQ

When did Vertex Inc. (VERX) complete the acquisition of ecosio?

Vertex Inc. completed the acquisition of ecosio on August 30, 2024.

What is the total potential value of the ecosio acquisition for Vertex (VERX)?

The total potential value of the acquisition is $180 million, including a $69 million upfront cash payment and a targeted earn-out of $76 million in cash and $35 million in Vertex shares.

How does the ecosio acquisition align with Vertex's (VERX) business strategy?

The acquisition aligns with Vertex's strategy to provide comprehensive tax technology solutions by integrating ecosio's e-invoicing capabilities with Vertex's indirect tax software platform, addressing complex regulatory requirements for international companies.

What is the revenue multiple for Vertex's (VERX) acquisition of ecosio?

The initial purchase price represents a five times revenue multiple based on ecosio's current revenue run rate. If all financial targets are met, the terminal multiple will also be approximately five times revenue.