Citing a highly fragmented tax preparation market that leaves plenty of room for expansion, Liberty Tax Service of Virginia Beach wants to go public.
JTH Tax, the parent company of Liberty, has filed a registration statement outlining the details of the offering, which would offer an undetermined amount of Class A stock.
The company said it is the third largest and fastest-gowing national retail preparer of individual tax returns in the U.S. and the second largest in Canada. It has nearly 3,900 franchisees and prepares 1.7 million tax returns each year.
The company had a net income of $15.7 million in 2012.
JTH said in its prospectus that in 2011, about 23 percent of the paid tax prep market was represented by national firms - Liberty, Jackson Hewitt and H&R Block.
"While virtually all of our offices are operated by franchisees, one of our national competitors primarily operates company-owned offices and the other national competitor operates a mixture of franchised and company-owned offices," the prospectus said. "The remaining 77 percent of the paid tax preparation market is primarily comprised of tens of thousands of independent tax preparers operating at a local and regional level.
"We expect to benefit from anticipated industry consolidation in this highly fragmented tax preparation market because independent tax preparers may seek to exit the industry as they confront increased costs and regulatory requirements, including tax preparer certification requirements.
Liberty was founded by John Hewitt, a co-founder of Jackson Hewitt who left that company, and, because of a non-compete clause, started Liberty in Canada before expanding it to the United States. Besides its tax preparation services, Liberty is known for hiring people to dress up as the Statue of Liberty and dance, prance and gyrate in front of its stores and on street corners to draw people in.
By Bill Cresenzo