M&A Politics and regulation Startups

An Auditing Startup Produced 2024’s Biggest VC-Backed M&A Exit. Who Could Be Next?

Illustration of freeway exits: SPAC, IPO, M&A.

Big M&A deals don’t always involve the buzziest industries or companies.

For a case in point, look at last week: Software investor Hg announced it would pay over $3 billion to acquire auditing platform provider AuditBoard. Amid a slow period for big M&A transactions, the deal ranks as the largest purchase of a U.S. private, venture-backed company in 2024, per Crunchbase data.

If AuditBoard is a name you’ve never heard of, you’re not alone. While the Cerritos, California-based company has an enviable track record — profitable, with over $200 million in annual revenue —  it wasn’t a heavy venture fundraiser. In a decade of operations, it pulled in $43.6 million total, raising its last Battery Ventures-led round back in 2018.

AuditBoard also managed to fly under the radar for the obvious reason that it’s an auditing and compliance software company. That’s not the kind of niche that produces household name brands.

VCs like auditing and compliance

But while it might not be a high-profile space, financial compliance- and auditing-focused startups have been pretty popular with venture investors. Their interest coincides with a mini-boom in funding to accounting-focused companies, several of which have raised large rounds this year.

For auditing and compliance in particular, some of the more recently and heavily funded names include:

  • DataSnipper, based in Amsterdam, provides productivity tools for auditing and finance. It raised a $100 million Series B in February, led by Index Ventures.
  • Supervizor, with offices in New York and Paris, markets a quality assurance platform for finance teams, which includes audit analytics tools. On Tuesday, the company announced it raised $22 million in a funding round led by Orange Ventures.
  • FloQast, based in Sherman Oaks, California, counts a former auditor, Mike Whitmire, as co-founder and CEO. The 11-year-old company, which sells accounting and compliance workflow automation tools, has raised over $300 million to date, including a $100 million April Series E led by Iconiq Growth.
  • Kintsugi AI said Wednesday it had raised a $6 million Series A led by Link Ventures. The San Francisco-based startup says its platform helps businesses simplify tax compliance using AI-powered automation.

Big money in tools to do dull jobs

In the wake of AuditBoard’s $3 billion exit, it’s timely to consider the year’s second-largest venture-backed M&A deal as well. OpenGov, a provider of software to streamline government operations, sold to existing stakeholder Cox Enterprises at a $1.8 billion valuation.

One commonality between both acquirees is they operate in industries — auditing and govtech — that don’t make for exciting conversation. Most people want to spend as little time and energy as possible doing things like verifying financial reports or dealing with the Department of Motor Vehicles.

It’s probably not a coincidence that companies offering ways to more easily and efficiently complete these kinds of dull and often complicated tasks are appealing to acquirers. There’s money to be made in software that does jobs we don’t want to do ourselves.

Public and private equity investors seem to agree. Intuit — the pioneer of tax and accounting software — is a roughly $170 billion public company today, trading near its all-time high.

On the M&A side, tax compliance software provider Avalara, one of the more recent generation of venture-backed companies in the space, sold to Vista Equity Partners for $8.4 billion in 2022. A few years earlier, it had carried out a successful IPO.

These might not be the buzziest companies or industries. But in a subdued environment for startup M&A, they’re more than pulling their weight.

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Illustration: Dom Guzman

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