Santa Barbara Tax Products Group

Santa Barbara Tax Products Group, LLC

Industry: Financial Services

Headquarters: San Diego, CA

Website: www.cisc.sbtpg.com

Investment Overview:

Santa Barbara Tax Products Group (“Santa Barbara”) is a leading provider of financial products and processing services to the tax preparation industry.  Santa Barbara provides its services through third party tax preparation firms, including tax preparers and tax software providers.  Customers include Intuit’s TurboTax Online (the largest consumer online tax preparation software) and approximately 25,000 independent tax preparation offices.  In late 2014, Santa Barbara merged with Green Dot Corporation (NYSE: GDOT), the largest provider of prepaid debit card products and reloading services in the U.S.  The merger generated a significant cash return, while also providing the opportunity to benefit from the continued success of Santa Barbara through potential earn-out payments and as a significant GDOT shareholder.  The transaction, which included cash and GDOT stock, was valued at approximately $400 million.

 

Transaction Background:

Santa Barbara's management team founded and led the Santa Barbara Bank & Trust tax processing division of Pacific Capital Bancorp ("Pacific Capital") for over 20 years. Pacific Capital was a Santa Barbara, CA based commercial and consumer bank that experienced financial difficulties as a result of the economic downturn. In response, Pacific Capital decided to sell the tax processing division in late 2009 to raise capital for its core banking operations.

Recognizing that Pacific Capital might need to sell the tax division to raise capital, Platform approached Pacific Capital in mid-2009 about acquiring the business in partnership with management. Platform was well positioned to make the acquisition because of our history investing in the tax industry through the IntelliTax division of our portfolio company, TRE Financial Services. IntelliTax had been a long-standing customer of Pacific Capital's tax division.

When Pacific Capital ultimately decided to sell the tax division, Platform was able to quickly negotiate the acquisition in partnership with management. The division was carved out from Pacific Capital and operated as a stand-alone business by Santa Barbara's management team.