Founders, senior staff and members of the McCarthy family as well as their Fexco business are reaping the full benefit of the $200 million sale of Taxamo announced on Thursday.

US-based Vertex has acquired the cross-border tax automation software firm, headquartered in Killorglin, Co Kerry just like Fexco, in an all-cash transaction equivalent to €165 million that closed this week. So where is this money going?

Taxamo comprises several companies owned through Evat Solutions Ltd. Their balance sheets established at the end of 2020 showed that they had no significant liabilities to any third parties. 

Other than normal ongoing trading creditors, Taxamo Checkout, the trading company selling the service to e-commerce customers, owed debt solely to its parent Evat Solutions “for the use of its platform”.

Evat Solutions, in turn, reported net current assets of just over €200,000 and “does not have any bank debt”. It simply owed €1.5 million in interest-free loans to its founder and CEO John McCarthy, and his father and co-director, Fexco founder and executive chairman Brian McCarthy.

Last year, the company also converted all issued convertible preference shares and tidied up ownership of a subsidiary in a share swap with a senior staff member. 

This means that, aside from the repayment of these directors’ loans, the full €165 million windfall is to be shared between Evat Solutions’ shareholders. Assuming a direct breakdown of this gross sum in proportion to shareholdings, John McCarthy alone is in line for a pay-out of more than €68 million based on his 41.6 per cent.

Next is his brother and current Fexco chief executive Denis, whose 25 per cent stake in Evat Solutions entitles him to a €41 million share of the proceeds. This is without counting their share of a €4.4 million slice going to KI Killorglin Investments Ltd, a family vehicle they co-own with three other relatives.

Fexco itself held a 20.5 per cent share of Evat Solutions, which places it in a position to receive a welcome €33.8 million as its core travel money business continues to suffer from the pandemic.

Other beneficiaries are five shareholder members of the Taxamo team set to become millionaires: head of infrastructure and local man Paudi Moriarty (€4.8 million); London-based head of tax Iman Ben Abbes Deschatres (€3.9 million); Tomasz Lipski, who acts as chief technology officer from Warsaw, Poland (€3.8 million); co-founder and senior executive Gregory Birdthistle (€2.7 million); and chief commercial officer Dermot O’Shea (€1.5 million), both based at the Killorglin head office. 

Partnership with Deloitte

Taxamo shot to the $200 million valuation after reaching key milestones ahead of additional EU requirement for e-commerce platforms to process Vat from this July. The sector has come under scrutiny for allowing customers to order products from outside the EU without charging Vat, undercutting European tax-compliant sellers or leaving consumers with unexpected costs and complications at customs. Brexit means that the requirement now applies to transactions between the EU and the UK.

In March 2020, Taxamo entered into a partnership with Deloitte to develop an automated solution vetted by the tax advisory firm. Accounts for Evat Solutions show that this deal alone brought in over €2 million, doubing Taxamo’s revenue last year.

Meanwhile, sales of its own products grew by 70 per cent in 2020 to €2.8 million. For the first time since it was founded in 2013, Evat Solutions returned a profit of over €1 million (though its trading subsidiary took away half of this in losses). This gain erased accumulated losses from previous years and placed shareholders in positive equity for the first time.

Five months later, the sale of their company to Vertex has flipped its book value nearly 1,000 times over.