Financial software maker Intuit Inc.
said Thursday that it will sell off its Quicken Loans business for an undisclosed amount of cash, a note and multi-year licensing fees.
Known for its offline software like Quicken, QuickBooks, and TurboTax, the Mountain View, Calif.-based company said the online mortgage site will become a wholly owned subsidiary based out of Livonia, Mich. The new company will retain all of the 1,000 Quicken Loans employees and will continue to offer residential home mortgages and home equity loans under the same brand.
The new company’s investors will be led by Dan Gilbert, chairman of Quicken Loans and founder of Rock Financial Corp. (the predecessor of Quicken Loans), which Intuit acquired in December 1999. Intuit said it will hold a 12.5 percent equity interest in the new company.
“Intuit acquired Rock Financial and entered the mortgage origination business when consumer ‘e-finance’ services were central to Intuit’s strategy,” said Intuit president and CEO Steve Bennett. “Since then, Intuit has focused more on driving growth in small business and tax — businesses where we have strong leadership positions in large and growing markets.”
Bennett said the decision to exit the mortgage origination business was based on its cyclical nature with less predictable earnings.
“Quicken Loans is a great business and has produced strong results for Intuit over the last two fiscal years,” said Bennett. “They have outstanding products and services and an experienced and talented management team, but the business is no longer a good strategic fit for Intuit.”
Over the past two years, Intuit has made a number of moves to realign its business portfolio. Faced with stiff competition online, Intuit has exited two other non-strategic consumer e-businesses – online insurance and online bill management.
Instead the company has moved ahead to execute its “Right for My Business” small business strategy and to expand its tax business.
In the last year alone, Intuit has made three acquisitions and announced a fourth to execute its “Right for My Business” strategy. It has acquired two companies that provide business management solutions for specific vertical industries — OMware, Inc., which provides solutions for the construction industry, and American Fundware, which provides business management software solutions to public sector organizations.
Earlier this month, Intuit announced a third such acquisition, Management Reports, Inc., which provides business management software solutions for commercial and residential property managers. In early June, Intuit also acquired CBS Payroll, which provides a full-service outsourced payroll solution, as part of its strategy to serve larger small businesses and provide solutions beyond accounting.
In addition, Intuit and Quick Loans have entered into a five-year distribution agreement through which Quicken Loans will provide mortgage services on Quicken.com. Intuit has also agreed to continue providing a line of credit to fund mortgage loans for a transition period of up to six months after the transaction closes.