Thousands of small business owners in Canada and the US were left reeling on Friday, December 27, when Bench, a prominent accounting and tax startup, abruptly shut down its entire website and operations without warning. The sudden move, which came without notice or severance for its hundreds of employees, has sparked widespread chaos and uncertainty among its over 12,000 customers.

The shutdown was reportedly forced by a bank calling in Bench's venture debt, according to The Information. Despite raising $113 million from investors like Bain Capital Ventures and Shopify, Bench's struggles with automation and tumultuous executive leadership ultimately led to its downfall. The company's push to embrace AI and automation tools in recent years, intended to improve efficiency and scalability, ultimately backfired due to execution issues and delays.

Former employees told TechCrunch that Bench's overreliance on automation tools, sometimes at the expense of human bookkeepers, caused significant delays and customer churn. One former staffer claimed that the company's automation tools didn't work properly, leading to books being passed around different teams instead of staying with one staffer. This resulted in some customers still waiting for their 2023 books in September 2024, well past key tax deadlines.

Bench's executive suite was also marked by turmoil, with multiple CEOs in recent years. Ian Crosby, the company's co-founder and first CEO, left in 2021 after a disagreement with board members. He was replaced by Jean-Philippe Durios, who focused on making the company profitable through automation. However, the strategy didn't work, and Durios was replaced by Adam Schlesinger in November 2024. Schlesinger, an executive-in-residence at VC firm Inovia Capital, was tasked with selling the company, but the process didn't pan out, leading to the sudden shutdown.

In a surprising turn of events, the shutdown sparked a flurry of media attention, which ultimately led to the company's salvation. Employer.com, an HR tech firm based in San Francisco, acquired Bench for an undisclosed price, saving hundreds of jobs and thousands of customers. Jesse Tinsley, Employer.com's CEO, tweeted that his team spent 36 hours hammering out a deal, which was finalized by Monday morning.

Despite the acquisition, uncertainty remains around Bench's sustainability. Employer.com has promised to honor customer contracts and fully service their accounts, but concerns persist about the quality of service, given the sudden firing of all Bench staff on December 27. Although many staff are being rehired, some are being offered only 30-day contracts, raising questions about the long-term viability of the business.

Employer.com's Chief Marketing Officer, Matt Charney, has assured that the deal involved "multiple legal firms" and the company feels "very very comfortable" with Bench's reputation and track record. However, the acquisition's speed and Employer.com's lack of prior accounting experience have raised eyebrows, highlighting the challenges of integrating two companies with different areas of expertise.

The Bench saga serves as a cautionary tale for startups and investors alike, highlighting the risks of over-reliance on automation and the importance of stable executive leadership. As the accounting and tax industry continues to evolve, the story of Bench's rise and fall will likely be remembered as a warning to entrepreneurs and investors to prioritize sustainability and careful planning in their pursuit of innovation and growth.