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A Liberty Tax Service specialist helps a client file his taxes, in Oakland, Calif., on April 16, 2018.Justin Sullivan/Getty Images

NextPoint Acquisition Corp. is acquiring tax preparation service Liberty Tax and small-business lender LoanMe for a combined US$354-million.

Liberty Tax is one of the largest tax preparation companies in North America, with approximately 2,700 locations. LoanMe, founded in 2014, specializes in small-business lending and has originated more than US$2-billion in loans.

Senior management of both acquired companies will join NextPoint, which will become NextPoint Financial, with Liberty Tax chief executive officer Brent Turner set to lead the company as CEO. The US$252-million deal for Liberty Tax and US$102-million purchase of LoanMe are expected to close in the second quarter of the 2021.

NextPoint Financial plans to do more than small-business lending and tax preparation, it says. The company will consider expanding into mortgage lending, mobile banking and financial health services, potentially through future acquisitions.

“If you are a Main Street consumer or a small business, chances are that in the past two decades it has been increasingly difficult to obtain credit and get good sound advice on practical financial solutions,” NextPoint Acquisition CEO Andy Neuberger said on a conference call Monday. “NextPoint Financial is on a mission to change that.”

Mr. Neuberger, who will become NextPoint Financial’s chairman, said the company will empower “hard-working and credit-challenged consumers and small businesses to get to the next point in their financial futures.”

Mr. Turner estimates that NextPoint Financial will generate 36 per cent of its revenue from consumer lending, 26 per cent from tax preparation, 16 per cent from lending to small and medium-sized businesses and the remainder from other sources. In 2021, the company forecasts a pro forma combined revenue of US$317-million, and pro forma combined adjusted earnings before interest, taxes, depreciation and amortization, or EBITDA, of US$100-million.

“Most of these customers are currently only using one of NextPoint Financial’s products,” he said. “This provides meaningful cross-selling opportunity.”

NextPoint is a Vancouver-based special purpose acquisition company, or SPAC, that was formed last July and began trading on the Toronto Stock Exchange in September. It is led by Mr. Neuberger, the former CEO of BasePoint, a New-York based subprime lender that he sold in 2020. John Lederer, the chairman of Staples Inc., is also on the management team.

SPACs have no commercial operations when they enter the capital markets. Instead, they pool money from investors to acquire target companies. SPACs, which are far more prevalent in the United States than Canada, had a renaissance in 2020, raising US$83-billion from 248 initial public offerings, according to SPAC Insider. From 2015 to 2019, SPACs raised US$41.8-billion from 172 IPOs.

Billionaire investor Leon Cooperman will lead a US$25-million purchase of NextPoint stock equivalents at a price of US$10 a share, along with Mr. Neuberger, Mr. Turner and other members of NextPoint’s board of directors.

Nextpoint has obtained a US$200-million credit facility, which can be used to help purchase Liberty Tax and LoanMe, and to fund potential acquisitions in the future.

“Once this transaction closes, we’ll have over US$420-million in committed credit facilities that can be used to fund our organic growth or to fund future acquisitions,” Mr. Turner said.

Shares of NextPoint fell 2.35 per cent Monday to US$9.99 at the close.

Jefferies Group LLC is the sole financial adviser to NextPoint, and Canaccord Genuity Corp. is its capital markets adviser. Brown Rudnick LLP and Blake, Cassels & Graydon LLP are acting as legal counsel to NextPoint.

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