
Atlassian Seeks Domicile Move to Pave Way for U.S. Initial Offer - ig1
http://www.bloomberg.com/news/2014-01-07/atlassian-seeks-domicile-move-to-pave-way-for-u-s-initial-offer.html
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glennos
As an Aussie, sad to see a homegrown company head overseas. Can understand why
though. 30% corporate tax, lower EBITDA: Market Cap and I'm sure plenty of red
tape. Tis a shame.

~~~
wluu
As a fellow Ausssie, I'm also sad about this. By the sounds of it, they've
given this move a lot of careful consideration.

But, rather than just be sad about it...

Might be a good opportunity to discuss what can be done to improve on the
situation for future Australian companies? In what ways can navigating through
the red tape be made simpler?

I know there's a lot of small startups springing up across at least Melbourne
and Sydney. So it's natural to assume Atlassian aren't the only ones faced
with this dilemma of moving overseas to further their business.

~~~
jacques_chester
It's probably not about red tape. It's that companies listed on US exchanges
have higher valuations than companies listed on the ASX.

There's just not that much red tape in Australia. Starting and running a
company costs a few hundred bucks per year. If you keep up your books,
reporting takes a few minutes per quarter.

Bam, you've successfully navigated all the red tape needed to run a software
business.

~~~
ig1
You don't have to be in the US to be listed in the US, Atlassian are actually
moving to the UK but listing in the US.

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nikcub
Exactly. This is all about corporate tax rates, capital gains, transfer
pricing, etc.

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jacques_chester
Could you elaborate? It'd be interesting to know more.

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rayiner
I don't know about Australia's system, but the U.K. has been a popular target
for reincorporation of American companies, along with Ireland and Switzerland:
[http://online.wsj.com/news/articles/SB1000087239639044423050...](http://online.wsj.com/news/articles/SB10000872396390444230504577615232602107536).
Bermuda, a popular domicile in the past, apparently made certain changes to
its tax code that caused companies to move to European countries.

For corporations, tax rates lead to domicile-shopping because finance analysts
use Earnings per Share (EPS), which is computed after taxes, as a key measure
of company performance. Relocating from somewhere in the U.S. to the U.K.
might substantially increase the total taxes paid by employees and executives
(almost every developed country has a higher individual tax burden than the
U.S.), but it can goose that all-important EPS number.

~~~
jacques_chester
Well part of the confusion is that one reason for our headline rate, as I
understand it, is because we have franking for company/income tax.

So Australian companies tend to pay dividends much more freely than US
companies, but the headline corporate tax rate is higher.

~~~
rayiner
That's actually an interesting illustration of the dynamic. The management at
publicly-listed companies are very preoccupied with what finance analysts have
to say about the stock. When someone at Morgan Stanley compares two companies
on an EPS basis, what's relevant is the rate paid by the company. It comes
down to $0.28 per share versus $0.35 per share, even if other features of the
tax code mitigate that difference when a dividend is actually paid out.

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junto
I really hope this doesn't fuck up the company offering. We are deeply
embedded with Atlassian products / services. JIRA is an ingrained part of our
daily business processes.

All of our developers actually like it - a first when it comes to bug / issue
/ story management tools. It has its quirks, but we haven't found anything
that matches it to date.

~~~
davedx
I love JIRA. The plugin ecosystem, on the other hand, reminds me of Wordpress
in a mildly negative way.

Vanilla JIRA and Bitbucket are both really solid offerings. JIRA is so
ubiquitous I've used it on and off at various companies almost since it was
first released. They've done so well there.

~~~
monksy
As someone who has attempted to fix a broken plugin... I completely agree.

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caspar
I'm a bit late to the party, but the article is misleading.

Atlassian is considering changing its corporate structure so that its parent
company is in the UK. Reasons include tax advantages and making the company
more attractive to investors in light of a possible future IPO. Supposedly
there are very few international companies listed on a US exchange which have
their parent company in Australia, which means Atlassian would be a riskier
investment.

That may involve having a few people in an office in the UK, but engineering
(and company) headquarters would remain in Sydney, Australia.

Nobody would be losing any jobs over this, and Atlassian would still be trying
to hire a boatload of developers in Australia.

Source: Scott Farquhar (co-CEO) at the December All Hands meeting (I work at
Atlassian).

Edit: should probably point out that this is all "may"s and "would"s because
it's up for a company-wide vote in the next few weeks - I have a ~500 page
information booklet sitting on my desk.

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Innercode
As a tax practitioner working with software companies and their owners I have
come to the conclusion that the Australian tax system is very hit and miss.
The base rates for corporate tax and capital gains tax are high. There are
some real tax traps laying around such as Division 7A which can inadvertently
cause major issues.

However for startups, the tax system can work very well for you if you make
full use of it. The recent changes to the R&D Tax Incentive have made it very
popular with startups as it can fund up to 45% of the development costs. Every
year I see many five and six figure tax refund cheques go to software startups
that don't have significantly large revenue.

Once you get larger, the tax & other benefits of offshoring are undeniable. I
would expect that Atlassian will keep their development teams in Silicon
Valley and Australia, who can still benefit from the better access to capital
and valuations from outside of Australia.

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u8337
> Sales jumped 34 percent from the previous 12 months to $149 million.

Atlassian has a really good growth, I've heard of a ~30% yearly figure:

> Atlassian's 2011 Revenues were $102 millions [1]

> 2009 revenue was $US58 million [2]

Which sounds like an exponential 30%. Any financial expert to confirm we're
comparing the right figures here?

> Scott Farquhar, who owns about 88 percent of the company with co-founder
> Mike Cannon-Brookes

> Accel Partners [...] now owns 10 percent of the company

Anyone knows how the structure of the capital works and who owns the rest?

[1]
[http://techcrunch.com/2012/01/16/atlassian-2011-revenues-102...](http://techcrunch.com/2012/01/16/atlassian-2011-revenues-102-million/)
[2] [http://www.smh.com.au/technology/enterprise/from-uni-
dropout...](http://www.smh.com.au/technology/enterprise/from-uni-dropouts-to-
software-magnates-20100715-10bdh.html)

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AhtiK
What is most likely the reason why Atlassian prefers moving to UK instead of
US?

Especially as the investors and NYSE&NASDAQ are in the US.

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wil421
I hope the move helps them and doesnt cause their products to suffer. We use
Jira in my organization and I hope that we can eventually get off SVN and move
to Stash or Bitbucket. Although thats probably a pipe dream but I still favor
Git over SVN.

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3825
Start with git-svn bridge locally and convert interested teammates one at a
time.

Just remember that until everyone is on board, you need strict discipline as
SVN has a much small feature set the Git does. Thereby, you should read the
git-svn documentation closely and not use any incompatible Git features. Good
luck!

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secoif
Are other AU companies feeling the same way?

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deevus
A bit of an aside but half relevant now that they could be moving overseas.

I tried to apply for an internship at Atlassian but was rejected because they
only take interns from UNSW. I was not pleased.

EDIT: I suppose it makes sense since the founders attended UNSW.

