Intuit Inc. (NASDAQ: INTU) today announced it has a signed a definitive agreement to acquire Innovative Merchant Solutions™ (IMS), a Calabasas, Calif.-based provider of credit and debit card processing services for small businesses. The acquisition continues Intuit's execution of its Right for My Business strategy to drive profitable growth in its small business growth engine.
"The acquisition of IMS enables Intuit to strengthen our offering for a critical 'beyond-accounting' service - merchant account services," said Steve Bennett, Intuit's president and chief executive officer. "Intuit has had a great track record with our existing merchant account service. Starting from zero three years ago, we've attracted 40,000 customers and created a $9 million business with a limited offering. IMS enables us to expand from that base by providing merchants with an enhanced offering, including a broader range of payment options such as PIN debit card processing and swipe terminals. In addition, we'll be able to provide an easy-to-use offering that tightly integrates with QuickBooks and is backed by service levels that exceed those in the industry today."
Merchant account services present a strong opportunity for Intuit to drive sustained revenue and profit growth. According to The Nilson Report, total credit and debit card spending was approximately $1.7 trillion in 2001 and is expected to grow 9 percent annually through 2005. By broadening it's offering, Intuit will be able to expand beyond its QuickBooks customer base to grow its merchant account services business. Approximately 2.7 million small merchants accept credit cards today, with an annual growth rate of approximately 8 percent, according to The Nilson Report and AMI-Partners.
Strong Customer Focus
Founded in 1999, IMS offers a full range of merchant account services to small businesses nationwide. "Like Intuit, Innovative Merchant Solutions has grown and prospered because we understand our customers and focus on delivering services that dramatically simplify how they do business," said Joe Kaplan, IMS' chief executive officer. "By combining the expertise and resources of both companies, we believe we can deliver even more value to customers - and more growth for Intuit."
Kaplan will continue to lead the IMS team and all of IMS' 110 employees will be asked to join Intuit. Kaplan has more than 13 years of experience in the industry and serves on the board of directors of the Electronic Transactions Association.
Terms of the Agreement
Intuit has agreed to acquire all of the equity of IMS for up to $116 million in cash. IMS had net revenue of approximately $25 million in 2002 and is profitable. Intuit expects IMS to contribute to Intuit's revenue and profit growth, but due to the size of the business, it will not impact its fiscal 2004 guidance, which was provided on Aug. 19, 2003. The acquisition is expected to close later this month.
