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Vertex, which tracks sales taxes for firms around the world, plans to go public this year; $4M for ambulance firm Roundtrip

Family-owned Vertex Inc., which has spent the past 42 years automating companies' local taxes, seeks to sell an initial public stock offering.

Jeff Westphal, former CEO of Vertex Inc. and son of founder Ray Westphal, and his sisters, who held other positions at the company, will continue to control voting shares after its pending IPO.
Jeff Westphal, former CEO of Vertex Inc. and son of founder Ray Westphal, and his sisters, who held other positions at the company, will continue to control voting shares after its pending IPO.Read moreC.F. Sanchez / Staff Photographer

Vertex Inc., a 42-year-old, family-owned King of Prussia firm whose software helps businesses track and pay sales taxes around the world, plans to sell shares in an initial public stock offering (IPO) and become a publicly traded company.

Banks led by Goldman Sachs plan to sell 21.15 million Vertex common shares at an expected price of $14 to $16 a share on the Nasdaq Global Market, under the ticker VERX, at an unscheduled date this year.

The proceeds — up to $344 million, minus the bankers’ cut — will go partly to pay down Vertex’s debt, plus “a portion of” the $123 million paid to founding family members Amanda Westphal Radcliffe, Stefanie Westphal Thompson, and Jeffrey Westphal as a “special dividend” back in May; and partly for “investments in our solutions, technology and sales force,” the company said in its offering statement.

About $17 million will fund stock-based grants to chief executive David DeStefano and other executives. DeStefano, CEO since 2016 and previously chief financial officer, was paid $1.4 million in stock, bonuses, and benefits last year, including his Union League membership.

The Westphals will continue to control most of the company’s voting (Class B) shares after the IPO.

They are children of Ranier “Ray” Westphal, who founded Vertex in 1978 and hired his wife, Antoinette (now deceased), as an early employee. All three of the children have worked at the company and are members of its board; Jeffrey is a former chief executive.

Vertex employs 1,100 full-time staff at its King of Prussia headquarters and offices in Sarasota, Fla.; Naperville, Ill.; London; Amsterdam and Maastricht, Netherlands; Frankfurt, Germany; Sao Paulo; Chennai, India; and Cork, Ireland.

Its software helps companies track and apply the bewildering array of local “indirect” taxes they pay — sales and use taxes, as well as value-added taxes, which are imposed on manufacturers and distributors in Europe and elsewhere.

Vertex software (and products by competitors such as Avalara and TaxJar) consolidate companies’ diverse business sales taxes much as ADP and Paychex handle payroll taxes, said certified public accountant James M. Brower Jr., partner at Marks Paneth LLP in Philadelphia. Sales taxes have been applied more often to online sales since a 2018 Supreme Court decision made it easier for states to pursue taxes from “distant companies,” including foreign sellers. And many states allow county, district, and city sales taxes. Some even tax shipping charges.

Vertex says it has more than 4,000 customers that pay taxes in 130 countries, including more than half the Fortune 500 major U.S. corporations. Vertex software works with Adobe/Magento, Microsoft Dynamics, NetSuite, Oracle, Salesforce, SAP, and other platforms.

Sales rose to $322 million last year from $272 million in 2018, and the company’s 2019 profit of $31 million more than reversed a loss the year before.

Despite “significant competitive challenges” from rivals including larger software companies, Vertex told the Securities and Exchange Commission and prospective investors it expects continued growth, with governments around the world boosting taxes and more companies in need of software to cope.

Vertex reported a loss of $29 million for the first quarter of 2020, despite record sales, after setting aside more than $40 million in new executive stock options connected to the IPO.

New ride

Philadelphia-based Roundtrip, a “digital transportation marketplace” that helps arrange ambulance rides online, says it has raised $4 million in new capital from investors led by Motley Fool Ventures and Zoll Medical Corp.

The company, founded by CEO Mark Switaj in 2016, had earlier raised $6.5 million. Other investors include UH Ventures, an investment affiliate of University Hospitals in Cleveland; Grays Ferry Capital; Johns Hopkins University; and Pennsylvania’s state-funded Ben Franklin Technology Partners.

Roundtrip says it will use the money to “geographically scale and specialize” operations. Clients include local medical systems and Medicare Advantage plans in 40 states.