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Michael Glover, the former head of KPMG’s Compliance Centre in Budapest, founded Taxually in mid-2018 with ex-colleague Stefan Mladenovic. Soon afterwards they were joined by Fergal Garvey, also from KPMG. Their company has developed the world’s first fully automated tool to manage the entire VAT compliance process, from registration in multiple jurisdictions right through to filing returns. Taxually has been consistently profitable and in May 2022 Ardian Growth acquired a minority interest in the company to support its ambitious growth strategy.
How did you come to be working with each other?
Michael Glover: We were profitable and growing quickly so money wasn’t the major reason that we were looking for a new shareholder.
We have a product that is well ahead of everything else in the market in terms of functionality and we knew VAT automation was an immense, global opportunity. But to seize it, we needed a strategic partner with a deep understanding of our industry in order to scale up faster and overcome our challenges.
We had experienced tremendous growth with limited investments – everyone we showed the product to was amazed and early on we formed partnerships with key marketplaces to provide VAT services for their merchants, which brought us a lot of clients. But we could see that, by itself, it was not going to be enough – we needed to be more ambitious and that meant building up our business development team and our HR function. Another key factor was that potential customers needed reassurance that even though Taxually was a very young company, we were here to stay. Having a major financial player behind us removes all those concerns. And then, finally, we were thinking about possible M&A further down the line, so we needed a partner with the right skills and contacts to help us with acquisitions.
end of 2021
meeting between the Ardian’s Growth Team and the founders of Taxually
MAY 17th, 2022
Ardian acquires minority stake of Taxually
Romain Chiudini: Ardian’s Growth Team is a specialist in software and e-commerce, so Taxually sits right in a sweet spot for us. This was clearly a company that we were very interested in meeting and when we went to Budapest at the end of 2021 to spend a day with Michael, Stefan and Fergal, we saw there was a close fit between us on the strategy and direction for Taxually. The quality of the team and their vision for the company were the number one reasons we were determined to invest. The first discussion we had wasn’t about financing or valuation. It was about their ambitions for Taxually and how we could help them. That told us that we could build a real strategic partnership – their goal is to be the global market leader and we are convinced that Taxually is a category killer and can become a worldwide player.
What gives Taxually its edge over the other players in its market?
We are the first company to offer online automated VAT registration, which makes Taxually a unique product.
MG: That makes us the only player in the market to offer an end-to-end automated VAT solution, all the way from registration with the tax authorities to data collection, data upload, data manipulation, testing and finally population of the returns. Everybody works off the same cloud-native platform and everything is interconnected – again we’re the only one in the market that does that. We were able to achieve this because of the deep knowledge of tax compliance that we have built up over many years at KPMG and the quality of our team – Fergal and Stefan are really exceptional thinkers in this field. Whenever we demonstrate our product, everyone’s eyes open and their jaws drop. We can complete VAT returns in seconds or minutes, as opposed to days or weeks, which is what people are used to, so using Taxually brings a massive efficiency gain for our customers.
One of the key points for us is that we see Taxually not just as a cutting-edge compliance solution that removes a major pain point for customers but also as a growth enabler that acts as a revenue accelerator for these companies. That’s an extremely powerful proposition.
RC: The other key advantage we see in Taxually is their agility. They have a pure cloud and SaaS-based solution, which puts their technology well ahead of the competition, and thanks to the way they have self-financed the company and their focus on profitable growth, they have strategic flexibility and are able to make decisions quickly.
MG: Our aim eventually is to reach unicorn status. We think that we have the capabilities to get there, maybe five to seven years from now depending on acquisitions and other things.
How do you see Taxually developing over the next few years?
MG: We don't think that our business is going to be just VAT. We are aiming to become the industry standard for tax compliance, so we are also starting to look at corporate tax and financial statement preparation. And we are also looking at other services. We have launched a business within Taxually for documentation around environmental protection. There is a major need for a product in this area too. And the other major priority is international expansion. We mainly serve Europe at the moment, although we provide services in Australia, New Zealand, Singapore and South Africa and we will grow more in those territories. But our big targets for growth are the US and Latin America. We already have clients pushing us to launch a product they can use in the US and we are working on that now.
We are in complete agreement with the team’s growth strategy and Ardian Growth is here to build the next worldwide category champion with Taxually.
RC: There are many opportunities to partner with e-commerce platforms and marketplaces, as well as huge potential in the enterprise market. Ardian Growth has a strong record of helping European companies scale up in the US and the opportunity for Taxually there is enormous. We see M&A as a relevant part of the growth strategy to complete Taxually’s offer and working on acquisitions is an important part of the support that Ardian brings to the table.
How has Ardian been helping Taxually since the deal closed?
MG: They are helping us in a lot of areas. A key one is board-level and founder-level contacts, which is really accelerating our progress because it opens doors for us that would have taken us much longer on our own.
They share a lot of very useful information and insight on market developments too – who is raising money and what they are intending to do – and they have been evaluating potential acquisition opportunities for us.
The partnership with Ardian Growth is also helping us with recruitment and in internal discussions with our people because it shows the level of support we have behind us.
Considering Taxually’s founders’ vision for the company, we knew from the start that it would be a perfect fit to grow together and bring operational and strategic support.
RC: For example, when facing new challenges regarding talents such as recruitment, management or retention, and new growth opportunities both organic and external through build-ups. As Taxually's partner, one of our top priorities is to leverage our relevant network to help Taxually in its direct commercial endeavors, and partnerships (business and technology oriented).
MG: The support Ardian is giving us is excellent, but I think the most important reason that we decided to invite Ardian’s Growth Team to invest was that we liked the team. Taxually is a profitable business. We didn’t look for a new shareholder because we needed money so we felt that if we were going to give up part of our equity, we wanted it to be with somebody that we liked and we thought we could work with. Ardian Growth were the right fit. We have a good, close team and we did not want to give up that great sense of fun we had in running the business
I think the most important reason that we decided to invite Ardian’s Growth Team to invest was that we liked the team.