For 18 months — from the last quarter of 2022 through the first quarter of 2024 — Tabitha Bailey faced trials and tribulations that few young corporate general counsel have encountered.
As vice president of legal affairs and chief corporate governance counsel for Blucora — later renamed Avantax — Bailey played a critical role in the $720 million sale of its TaxAct software business in October 2022. Days later, the Richardson-based wealth management firm became embroiled in an alleged data breach crisis that led to congressional inquiries, state and federal investigations, four class action lawsuits and hundreds of individual arbitrations, which required extensive communication with investors and the private equity fund buyer that was making noises about terminating the deal.
The hard and thoughtful work of Bailey and the Avantax team paid off, as the transaction closed on time and with no reduction in the purchase price.
But the frenzy for Bailey was only starting.
In January 2023, the company named her its new chief legal officer. In the months that followed, Avantax would face its third activist challenge and proxy contest in three years, execute a $250 million tender offer, overhaul its executive compensation plan and successfully complete a $1.2 billion take-private merger with competitor Cetera.
“Honestly, the last year has been a bit of a blur in the best way,” Bailey told The Texas Lawbook in an interview.
Earlier this year, the Association of Corporate Counsel’s DFW Chapter and The Lawbook honored Bailey with the 2023 DFW Corporate Counsel Award for General Counsel of the Year for a Midsized Legal Department.
Tabitha Bailey accepting the 2023 DFW Corporate Counsel Award for GC of the Year for a Midsized Legal Department from ACC-DFW president Alvin Benton and Kristin Johnston of Newhouse+Noblin
“It is hard to imagine a chief legal officer who has accomplished more this past year than Tabitha Bailey,” said Sidley Austin partner Beth Berg, who nominated Bailey for the award. “Tabitha’s contributions to Avantax were staggering — from leading the company through its high-profile, roller coaster sale, to beating its activist nomination and pressure campaign, to overseeing its $250 million tender offer, to managing complex data privacy lawsuits, to refinancing the company’s debt and setting up a hedging program.”
“Tabitha Bailey is the lawyer you want by your side when everything is on the line,” Berg said. “She can quickly assess any situation and immediately get to the crux of an issue and see 10 steps down the road. She operates on many dimensions, understands policy and political headwinds, is deeply experienced in complicated regulatory issues and, most importantly, knows how to build consensus and make things happen. She will be a force to reckon with for many years to come.”
“At 38 years old, she is a powerhouse CLO who has accomplished more in 13 years of practicing law than most lawyers achieve in a lifetime,” she said.
Susan Wetzel, a partner at Haynes Boone, said one of Bailey’s “greatest strengths is her tenacity.”
“Once she sets her mind to get something done, you know she will find a way to get it done efficiently and effectively,” Wetzel said. “Tabitha is extremely practical in her approach to challenges and keeps her cool under pressure. She is great at identifying the issues that need to be handled by her and what can be appropriately delegated to her team and provides clear and concise directions to those she works with to enable them to complete the tasks she asks of them.”
“Tabitha is whip-smart and has a great sense of humor, but my favorite thing about her is that she always tells it like it is and gets to the heart of the issue,” she said. “Her common-sense, no-nonsense approach makes her both a fabulous chief legal counsel and a fantastic mom to her three boys.”
Jim Ducayet, a partner in Sidley’s Chicago office, said Bailey is “a straight shooter.”
“You will know where you stand with her,” Ducayet said. “People see her in action and trust her judgment, so they naturally want to follow her.”
Bailey was born in Sumter, South Carolina. Her father is a mechanical engineer, which required the family to move multiple times throughout her early childhood. Her mother was a stay-at-home mom who became a real estate agent when young Tabitha was in middle school. The family settled in Conway, Arkansas, where they lived throughout her high school years.
“I had no family members who were lawyers,” Bailey said. “However, from a very young age, my parents often contended that I should consider becoming a lawyer. I enjoyed persuasive writing and debate. I was passionate and determined, and I had a strong sense of fairness.”
Premium Subscriber Q&A: The Lawbook visited with Bailey about what outside lawyers need to know about her. But she also talks about her hero in life, her great-grandmother, who impacted her life in so many ways.
Bailey decided to become a lawyer during her senior year of college at Ole Miss, though she explored potential careers in law, public policy, governmental affairs and academics. During college, she interned in the U.S. Senate, served as a teaching assistant and worked part-time in a local legal office.
“After much deliberation, I concluded that a career as a corporate lawyer would allow me to explore my varied interests: the law, game theory and decision making, finance and governmental affairs,” she said.
Bailey graduated with a law degree from Vanderbilt University in 2010 and then joined the corporate practice at Haynes Boone. She then spent nearly four years practicing law at Akin in Dallas.
“Even before I graduated from law school, I was intrigued by in-house legal roles. I loved the economics, calculus and business law courses at Ole Miss and Vanderbilt Law,” she said. “So, a career that would allow me to leverage my legal expertise while delving into the realms of finance and strategy was appealing.”
Despite the business inclination, Bailey recognized the importance of refining her corporate legal skills before transitioning to an in-house position.
In 2017, “the perfect opportunity presented itself” when a client — TransAtlantic Petroleum, a small publicly traded international oil and natural gas company operating in Turkey and Bulgaria — approached her about becoming its general counsel and corporate secretary. During her three-and-a-half years at TransAtlantic, Bailey negotiated numerous oil and gas service agreements and leases and guided the company’s board through a take-private transaction, which closed in 2020.
In November 2020, Bailey joined Avantax, which was then known as Blucora, as the firm’s vice president of legal and lead counsel on all matters related to the U.S. Securities and Exchange Commission.
“The board had refreshed the management team earlier that year and was in the early stages of a transformation of each of Avantax’s businesses,” she said. “The teams were smart, engaged and motivated. Avantax had the elements necessary to overhaul two promising businesses, and I was excited about the opportunity to help Avantax navigate during this time of significant change.”
Less than two weeks after Bailey arrived at Avantax, activist investor Ancora Holdings informed Avantax that it intended to nominate four directors for Avantax’s board of directors, criticizing the board’s composition, strategic actions and personnel decisions and urging Avantax to consider selling TaxAct. The directors nominated by Ancora — the head of marketing for a private mortgage company, a director of marketing and investor relations for a hedge fund, the CFO of an HVAC company and the lead principal of Ancora — “had substantially less relevant experience than Avantax’s incumbent board,” she said.
“Altering the composition of Avantax’s board would have derailed the significant progress that the refreshed board and management team were making and the value being created for stockholders,” Bailey said. “The strategy proposed by Ancora — an immediate sale of TaxAct — was designed to potentially generate short-term value at the expense of destroying long-term value for stockholders. Avantax had already engaged independent financial advisors to assess strategic options and determined that early 2021 was not the optimal time to sell TaxAct as the board believed that TaxAct had significant performance upside that Avantax would not have gotten credit for at that time.”
“The 2020 tax season was materially impacted by the pandemic, including the unexpected decision from the IRS to lengthen the tax season, which impacted marketing efficiency and consumers’ behavior in ways that were unpredictable and slowed the benefits of Avantax’s transformation efforts,” she said.
Avantax’s board, executives and Bailey worked tirelessly to develop messaging and communication strategies to influence investors and other stakeholders, to prepare for dozens of meetings with investors and proxy advisors and to analyze corporate governance policies and compensation practices.
“What is interesting regarding the final days of a proxy fight is that the majority of the time — unlike in an uncontested proxy — the outcome of the vote remains uncertain until the day of the vote,” Bailey said. “For contested proxies, many institutional investors wait until the last two to three days prior to the vote to submit their proxies in order to avoid a prolonged period of additional conversions with representatives of the company and the activist. During those final days before the meeting, representatives of the company and representatives of the activist are busy attempting to convince investors that are voting for their candidates not to change their votes and convince investors that are not voting for their candidates to change their votes.”
Despite all the chaos and challenges and victories during Bailey’s three years at Avantax, April 21, 2021, “will always stand out in my mind” as the best day.
“On the morning of the vote, [we] were all anxiously awaiting the final vote, and I remember getting the call that our stockholders had officially reelected the incumbent board while I was making breakfast for my kids before school,” Bailey said. “The feeling of pride and satisfaction when I learned that Avantax’s incumbent directors had prevailed is a memory that I will never forget.”
In January 2023, after Avantax closed on its sale of TaxAct, the company promoted Bailey to chief legal officer. Little did she know that numerous headwinds and challenges remained.
“Tabitha went from the frying pan into the fire,” Berg said. “Tabitha barely had time to catch her breath. In addition to leading the company’s debt refinancing in early 2023, she managed the legal and compliance issues for the company’s creation of a hedging program for cash sweep income, which Avantax implemented in Q2 2023 to address changes in risk resulting from the TaxAct sale.”
Avantax faced two more activist investor campaigns, two weather disasters, political pressures related to TaxAct’s privacy practices and use of customer data, negative impacts associated with government actions — including a rapid decrease in the federal funds rate and an unprecedented IRS extension of tax seasons — and negative industry impacts due to decreased client cash balances following the collapse of Silicon Valley Bank.
Bailey also spent a lot of time in 2023 overseeing the four class actions and 280 individual arbitrations relating to TaxAct’s use of tracking pixels, which are tiny snippets of code that allow a company to gather information about website visitors.
Then in May 2023, Avantax’s board authorized an exploration of a potential sale of the company.
Bailey said her “greatest challenge was navigating multiple sale processes” of TaxAct and then of Avantax, which included “the collection of thousands of diligence requests” without disclosing the transactions to their respective teams.
“The group was purposely small so as not to distract the Avantax team from running the businesses,” she said. “While certainly the appropriate approach, it required those of us who were leading the sale processes to tackle the extensive amount of work and responsibility associated with launching and managing a sale process while also navigating our day-to-day responsibilities and showing up for our teams and our clients and customers in a manner that would not raise red flags with our teams.”
The key, according to Bailey, was to keep their teams focused on “delivering on that strategic, organizational, operational and cultural overhaul that transformed our businesses from extended periods of disappointing customers and clients and decreasing market share to high levels of customer and client satisfaction, market share growth, revenue and EBITDA growth and increased shareholder value.”
“Balancing these competing demands honed my ability to utilize time efficiently, multitask, prioritize projects, delegate effectively and sometimes operate with little sleep,” she said. “Looking back, the past two years have been chaotic, but I cannot imagine a better way to grow as a leader, an executive, a manager and a lawyer.”
Haynes Boone partner Dan Malone said that Bailey “possesses a unique skillset of being one part technician and one part business executive.
“Tabitha has an uncanny ability to identify and address legal risks within an organization and translate those risks into actionable, business decisions that empower the executive team and board to make informed decisions,” Malone said. “Her leadership is evidenced by the trust she places in her team and her outside advisors, allowing every team member to voice an opinion or provide analysis that she then questions and validates as needed before presenting the solution to the business team.”
In September 2023, Cetera Financial Group signed an agreement to buy Avantax for $1.2 billion. The transaction closed Nov. 27.
“Honestly, the last year has been a bit of a blur in the best way,” Bailey said. “Most days, I woke up between 5:30 a.m. and 6 a.m. and then completed a workout, prepared for the day and assisted my three boys in getting ready for school. Then, I dropped the boys at their respective schools — often multitasking by taking calls from the car.
“After traditional working hours, I allocated time for dinner and transporting my boys to and from their various team commitments,” she said. “While occasional calls took place during this period, I strived to safeguard these hours with my family. In the evening, I engaged in drafting and reviewing documents, responding to emails and clearing items from my to-do list. Additionally, due to packed daytime schedules, meetings related to the sale process were often scheduled late in the evening to maintain normalcy and avoid raising questions from the team.”
With the sale complete and the transition to new ownership successful, Bailey left Avantax in January.
“While it was hectic, I truly enjoyed every day at Avantax,” she said. “I was constantly learning and facing new challenges. Balancing high-level strategic responsibilities with the intricate details of complex projects, I collaborated with an effective, motivated, and energetic leadership team and led top-tier legal and compliance groups.”
Sidley’s Berg said Bailey definitely earned the honor of being the 2023 GC of the Year.
“Tabitha Bailey is the lawyer you want by your side when everything is on the line,” she said. She can quickly assess any situation and immediately get to the crux of an issue and see 10 steps down the road. She operates on many dimensions, understands policy and political headwinds, is deeply experienced in complicated regulatory issues and, most importantly, knows how to build consensus and make things happen. She will be a force to reckon with for many years to come.”