NerdWallet, Inc. (Nasdaq: NRDS), a platform that provides financial guidance to consumers and small- and mid-sized businesses, recently announced the entry into an acquisition agreement with On the Barrelhead, Inc., a data-driven platform that “provides consumers and SMBs with credit-driven product recommendations to help improve their financial lives.”
Through this acquisition, On the Barrelhead will “fully integrate into NerdWallet’s existing teams, brand, products and technology.”
NerdWallet’s “trusted” brand and knowledgeable financial guidance paired with On the Barrelhead’s proprietary data and technology solutions will “enable consumers and SMBs to match with better financial products and make smarter money moves.”
Tim Chen, CEO and Co-founder of NerdWallet, said:
“Our vision for a trusted financial ecosystem means we’re able to provide consumers and SMBs with a trusted platform to learn about various financial topics, shop for products, connect their data and receive data-driven nudges. On the Barrelhead’s data and technology solutions will help us advance toward our goal by enabling us to leverage consumer information to provide users with relevant financial guidance and more personalized and compelling product recommendations. Their differentiated technology solutions and NerdWallet’s trusted brand and reach will also strengthen our footprint in the lending space by providing significant value to our partners.”
On the Barrelhead was founded with a goal “to help consumers and SMBs understand and navigate their loan options to improve their finances.”
Their platform “provides consumers and SMBs with highly personalized credit recommendations by intelligently matching customer credit information with financial partner data.”
By leveraging data analysis, On the Barrelhead’s platform also “helps users improve their finances by surfacing new product recommendations to manage their debt and save them money.”
Sam Yount, CEO and Co-founder of On the Barrelhead, remarked:
“Finding trustworthy guidance and recommendations on how to access capital and consolidate debt is hard to come across for consumers and SMBs. We are excited to be joining NerdWallet’s dedicated and knowledgeable team to unlock more ways for our users to optimize their finances.”
NerdWallet expects that its trusted brand and massive reach combined with On the Barrelhead’s differentiated technology will “unlock profitable growth at scale and help advance toward becoming a trusted financial ecosystem.”
In addition to NerdWallet’s ongoing expansion into new financial categories and geographies, this acquisition “reinforces NerdWallet’s ability to vertically integrate, as proven with its successful acquisition of Fundera.”
For the twelve months ended December 31, 2021, On the Barrelhead “generated approximately $38 million in revenue, growing roughly 90% year-over-year, and $5 million in net income.”
NerdWallet believes the acquisition of On the Barrelhead would have “been accretive to NerdWallet’s revenue and adjusted EBITDA for the year ended December 31, 2021.”
NerdWallet expects the acquisition will be “accretive to NerdWallet’s 2022 revenue and adjusted EBITDA and reconfirms previously announced expected year-over-year increase in its 2022 annual adjusted EBITDA margin.”
Under the terms of the merger agreement, NerdWallet will “acquire all of the outstanding shares of On the Barrelhead for total consideration of approximately $120 million, subject to customary purchase price adjustments, consisting of approximately $70 million in cash and $50 million in NerdWallet Class A common stock.”
The NerdWallet equity issued “as part of the transaction will be determined based on the 30-trading day volume-weighted-average price as of June 22, 2022, or $10.37 per share, and half of the equity will have a two-year lock-up restriction.”
NerdWallet expects “to finance the cash portion of the acquisition with borrowings from its existing credit facility.”
A new compensatory bonus retention pool of approximately $30 million “has been planned for On the Barrelhead management.”
The transaction is “subject to customary closing conditions and is expected to close in the third quarter of 2022.”
Solomon Partners “acted as the exclusive financial advisor to On the Barrelhead in the transaction.”
For more details on this update, check here.