What’s new: Tax services giant H&R Block has entered into an agreement to buy Wave Financial, a digital accounting services firm with over 400,000 small business clients, for $537 million (US$405 million) in cash.
What’s in it for H&R Block: New revenue streams. Kansas City, Mo.-based H&R Block processed 23 million tax returns in fiscal 2019, bringing in $3.1 billion in revenue. Wave offers a suite of products for small businesses, including payroll, invoicing, bookkeeping and credit card processing. This will allow H&R Block to compete with banks and accounting firms, while offering complementary accounting products like Intuit—which makes QuickBooks and TurboTax, software for bookkeeping and tax filing, respectively—does.
What’s in it for Wave: Access to H&R Block’s customer base and global scale. Wave has about 260 employees, nearly all in Toronto. H&R Block has 70,000 tax professionals and 11,000 retail tax offices in the U.S., Canada, Australia and India. Adding that service helps Wave address a long-standing concern for its customer base. “If you’re a small-business owner, when tax is due, you’ve got weeks of stress, generally, to make sure that you’re in good shape,” Kirk Simpson, Wave co-founder and CEO, told The Logic shortly after the term sheet was signed.