HR Block said Tuesday it has agreed to acquire Wave Financial, a provider of small business accounting software, for $405 million in cash.

Based in Toronto, Wave’s software is used by more than 400,000 small businesses and includes invoicing, payroll, bookkeeping and payments technology. The company was founded in 2010 with just eight employees and now has over 250 employees.

The acquisition is expected to expand HR Block’s presence in the small business market. The Kansas City, Missouri-based tax prep giant is mostly known for its tax services and technology, but it has periodically made moves to provide accounting and bookkeeping services as well. Wave has been rapidly expanding in recent years by offering free accounting, invoicing and receipt-tracking software to small businesses. Wave generates revenue by providing payment processing, payroll services and bookkeeping services, with more products currently in the development phase. Block is estimating the transaction will generate $40 to $45 million in revenue for fiscal 2020 once the transaction closes.

“I’m extremely excited to welcome Wave, an innovative company with an outstanding team, to HR Block,” said HR Block president and CEO Jeff Jones in a statement. “Bookkeeping and cash flow management are significant pain points for small business owners and essential to successful annual tax preparation. Wave addresses these concerns by delivering financial solutions and a simple user experience on a single platform. Wave provides us the opportunity to accelerate our small business strategy and is a great strategic fit, as both companies can leverage each other’s capabilities to bring tax and financial solutions to small business owners, serving more clients in more ways.”

Block anticipates the acquisition will give it some new growth opportunities, thanks to Wave’s disruptive pricing model. “Given the complementary strengths of these two great companies and our shared vision of providing financial help to people who need it, we’re delighted to be joining the HR Block team,” stated Wave CEO Kirk Simpson. “We are excited to work together to deliver additional value to small businesses to help them succeed.”

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