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Engine urges Avantax to ‘explore strategic alternatives’

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Engine Capital LP, an activist hedge fund that owns approximately 2% of the outstanding shares of Avantax, Inc, has written a letter to the company’s board of directors, urging the tax-focused wealth management services provider to consider “strategic alternatives”, including a sale of the business.

Engine has commended the company for the sale of its TaxAct software division to Cinven to focus on its core business, but believes that despite returning the proceeds of that sale to stockholders through a Dutch tender offer and regular share buybacks, the company’s stock “continues to trade at a meaningful discount to its strategic value”.

In the letter Engine says that a sale of the company could achieve between $27 and $32 per share, which equates to a 34% premium for stockholders, and sets out 10 reasons why Avantax should publicly announce a sale process – the first of which is that the company is “a subscale asset in a consolidating industry where size matters”.

Engine is hoping to arrange a meeting with members of the board to discuss the issues set out in the letter at their “earliest convenience”.

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