KEY POINTS

  • Intuit likely to buy Credit Karma in cash-and-stock deal
  • Credit Karma’s current valuation is higher than the $4 billion two years back
  • Deal will be 37-year-old Intuit’s biggest transaction and first major one under Goodarzi

Intuit’s imminent $7 billion deal to buy Credit Karma is likely to boost the valuation of fintech startups. Credit Karma was reportedly valued at $4 billion a couple of years back and had been considering an initial public offer, or IPO.

Credit Karma apparently dropped the IPO plans after the tepid investor response to Uber and the failed public offer bid of WeWork, according to a report in the New York Times. Credit Karma’s sale bid also underscores the hastening trend of fintech companies going for outright sale rather than entering the primary market, according to the report.

mortgage Fintech is changing the mortgage market completely. Photo: Christopher Furlong/Getty

Intuit, the maker of Turbo Tax, is nearing a deal to buy personal finance portal Credit Karma in a cash and stock deal, a report on Fox Business says. The move would help the bookkeeping software firm wade further into consumer finance by providing a trove of quality consumer credit data, according to the report. TurboTax is a software that hundreds of thousands of Americans use to file their taxes online.

The San Francisco-based Credit Karma, co-founded 13 years back by Kenneth Lin, Ryan Graciano and Nichole Mustard, has a credit score platform that also advises Americans on how to improve their credit score. Credit Karma makes available credit scores and credit reports free from national credit bureaus TransUnion and Equifax, as well as daily credit monitoring from TransUnion. Credit Karma alerts users to possible data breaches, credit monitoring, and tax preparation and filing. While customers receive offers for credit cards and loans tailored to their credit history, Credit Karma makes money when customers use those products, Fox Business says.

Online budgeting platform

The deal will be the 37-year-old Intuit’s largest acquisition yet and the first big transaction under Chief Executive Sasan Goodarzi, who recently took the reins of the company.

Valued at $77 billion, Intuit is eyeing a stronger foothold in the burgeoning realm of online personal finance. Intuit's products like QuickBooks bookkeeping software for businesses and Mint, an online-budgeting platform that also pitches individuals' financial products, will also benefit from the deal.

The deal in cash and stocks is likely to allow Credit Karma to continue to operate as a stand-alone unit with Lin at the helm. However, the collaboration of the two companies would help both sharpen their recommendations to customers by improving the quality of financial data.