Liberty Tax to Partner with LoanMe in Merger with SPAC | Franchise mergers and acquisitions
Liberty Tax Service franchisees will be able, but not required, to offer consumer and business loans in addition to tax preparation services if its $ 243 million merger with NextPoint Acquisition Corp. ends by mid-June, as CEO Brent Turner expects.
A Canada-based special buying acquisition company or SPAC, NextPoint is also looking to buy LoanMe, a California-based lender that issues consumer and business loans, at sometimes triple-digit interest rates. WalletHub said that LoanMe personal loans charge an annual rate range of 9.9% to 98%. Business loans have interest rates ranging from 14.9% to 149%.
The deal is expected to close in mid-June, with Turner becoming CEO of the new company NextPoint Financial, Turner confirmed by email last month. Franchisees could then offer tax preparation and loan services. Turner called the loan products “very profitable” on an investor conference call and said they would be available in 850 Liberty Tax locations by 2023. Liberty Tax has 1.6 million customers and 2 700 locations, Liberty said. At the start of 2017, it had 3,668 units, according to its franchise backgrounder.
The current seller and owner, called Franchise Group Inc. after a name change from Liberty Tax, will use $ 182 million in cash proceeds to pay off debt. Franchise Group, backed by venture capital firm Vintage Capital Management upon the departure of founder and former CEO John Hewitt in July 2018, began acquiring additional brands in 2019, and its holdings now include Buddy’s Home Furnishings, American Freight, The Vitamin Shoppe and Pet Fournitures Plus.
NextPoint describes its mission as “a one-stop-shop financial services destination that brings hard-working, credit-difficult consumers and small businesses to NextPoint in their financial future,” according to an investor presentation. He described “huge opportunities for cross-selling synergies” between Liberty Tax and LoanMe.
Liberty Tax sued founder John Hewitt in March, citing unfair business practices.