In dealmaking binge, LendingTree CEO branches beyond mortgages

Charlotte-based LendingTree has been on an acquisition binge in recent months, and CEO Doug Lebda says the company will continue to evaluate potential matches for deals.

Since November of 2016, LendingTree, which connects consumers to lenders, made three internet property acquisitions, including two in under a week, with the goal of diversifying its offerings and taking advantage of rising interest rates.

“We’re identifying companies that can benefit from being part of the LendingTree platform, searching for mutual beneficial scenarios,” Lebda told the Observer in an interview earlier this month. “We’ll continue to execute on our strategy and remain disciplined when it comes to acquisitions. Our goal is to continue to diversify, grow and meet the needs of consumers, lenders and partners alike.”

Founded in 1996, the company has had a long history with dealmaking. Not all have worked out as expected. Lebda, in fact, sold the entire company in 2003, but it was later spun out again as a separate company.

After struggles during the financial crisis, which included staff cuts, LendingTree has been faring well for investors in recent months. Since the election of Donald Trump boosted financial stocks in November, the company’s shares are up more than 120 percent, compared to a more than 15 percent increase in the Standard & Poor’s 500 Index.

On Thursday, investors will be watching the company, which employs 369 people in Charlotte and 460 in total, when it reports second-quarter earnings. In the first quarter, the company reported $11.5 million in net profits on record revenue of $132.5 million.

The company’s recent buying spree began in November when it acquired CompareCards, a side-by-side credit card comparison site, for up to $130 million.

On June 15, LendingTree bought assets of DepositAccounts.com, a site that provides bank deposit account information for consumers, for as much as $33 million. Just five days later, the company added MagnifyMoney, a site that offers comparisons of banking and credit-based products, for up to $29.5 million.

In these acquisitions, the LendingTree mergers and acquisitions strategy team was led by a new face: J.D. Moriarty, who came to the company in April after leading the U.S. equity capital markets division at Charlotte-based Bank of America.

“With DepositAccounts.com, we saw an opportunity to enter the deposits space, which is timely given today’s interest rate environment, and MagnifyMoney allows us to further diversify our marketing channel mix,” Lebda said.

Steven Cox, a marketing professor at Queens University of Charlotte, said LendingTree’s acquisitions might serve a greater purpose beyond brand expansion.

“Quite clearly they are trying to broaden their portfolio,” Cox said. “What they’ve done here is taken a list of companies who have a lot of clients that like to do financial business online, and now they have access to potential customers whom they’ve never seen before.”

History of deals

Lebda launched LendingTree 20 years ago as a young accountant frustrated with the process of finding the perfect mortgage.

Not long after the company’s initial public offering in 2000, the dot-com bubble burst, and internet stocks took a nosedive. But Lebda believes his company capitalized on the dot-com crisis more than it was shaped by it.

“We didn’t panic because of a stock price – we realized that was merely an external measure of worth, not our own,” Lebda said.

By 2002, things began to turn around, and in 2003, Lebda was approached by internet giant IAC/InterActiveCorp with offers to buy the company. At that time, he had no intentions to sell, but eventually he came around to the idea.

In joining IAC, Lebda put LendingTree alongside the other comparison shopping website properties that IAC owned at the time, including TicketMaster, Home Shopping Network (HSN), Match.com and Expedia. In 2005, Lebda became President of IAC, helping the company transition from being a holding company to a unified operating company. Along the way, he saw, more closely than before, how the other comparison shopping brands used the internet in their business practices.

“When I was president of IAC, I had to dive into new businesses, new business models and gained a better understanding and appreciation for e-commerce and how to manage a true corporation,” Lebda said. “The common glue that held everything together was that each business had a large Internet component, connecting consumers to products and services in an online environment.”

When the 2008 financial crisis settled in, IAC spun off LendingTree to once again become its own public company, Tree.com. At that time, Lebda had a conversation with former General Electric CEO and IAC adviser Jack Welch, who told Lebda he’d be “an idiot” not to return to his brainchild. Eventually he did, and Tree.com rebranded itself as LendingTree in 2014.

“That conversation was a huge turning point for me,” Lebda said. “Deep down I knew that’s what I needed to do, but hearing it from Jack, who is one of, if not the most respected and celebrated CEOs, that solidified the decision for me.”

Back as CEO, he has had to make decisions about past acquisitions.

In 2012, the company sold its LendingTree loans business, which it formed after acquiring HomeLoanCenter in 2004, to Discover Financial. Discover later closed the business. Lebda also said he wishes the company hadn’t sold its RealEstate.com business in 2011, “but then again, at the time it made sense.”

Meanwhile, LendingTree continues on a growth path. In November, LendingTree announced a $47 million expansion in Charlotte over five years; the company has already increased its local employee base and plans to move into a two-building headquarters campus in SouthPark next year.

This story was originally published July 26, 2017 at 2:35 PM with the headline "In dealmaking binge, LendingTree CEO branches beyond mortgages."