MeridianLink agrees to privatization deal

Lending software platform MeridianLink will go back into private hands after announcing Monday it had agreed to terms of an acquisition deal with investment management firm Centerbridge Partners.

The deal to reprivatize the Irvine, California-based technology provider is the latest in a wave of mortgage-related mergers and acquisitions this year and also comes as advances in artificial intelligence underscore demand for advanced lending capabilities. 

"Today's announcement is a strong endorsement of our leading digital lending platform that serves nearly 2,000 community financial institutions and reporting agencies," said Larry Katz, president and incoming CEO of MeridianLink, in a press release.  

"Together with Centerbridge, we will unlock the potential of this company by accelerating product innovation, harnessing the power of AI and data and enhancing the delivery of exceptional customer experiences," he added.

The all-cash deal is valued at approximately $2 billion. Terms of the agreement includes a payout of $20 per share of common stock to MeridianLink investors. The purchase price comes in at nearly a 26% premium over the stock's closing price of $15.88 on Aug. 8. 

MeridianLink's board of directors unanimously approved the acquisition, which is scheduled to close later this year and will be followed by the company's removal from public trading. MeridianLink went public in 2021 at the height of the most recent mortgage-lending boom. 

Centerbridge's board concluded that the deal would create "compelling and immediate value for our shareholders at an attractive premium and position MeridianLink to increase its competitive edge in a rapidly changing technology landscape," said Ed McDermott, chair of the software provider.

Recent mortgage industry consolidation trends

The agreement between the two companies comes as the mortgage industry sees consolidation ramping up this year, continuing trends that began to materialize in 2021 as originations initially fell off in anticipation of increasing mortgage rates.   

Mortgage analysts previously noted the likelihood of heightened M&A activity to occur throughout 2025 with the housing market still encountering headwinds. Blockbuster mergers involving real estate and mortgage heavyweights Rocket Cos., Mr. Cooper and Redfin dominated headlines, but the rising demand for AI has also put technology providers in the spotlight, making them attractive to potential buyers.

Also falling back into private hands this year is Guild Mortgage, whose acquisition by Bayview Asset Management further points to the value mortgage industry investments may hold for private investment firms. The Guild-Bayview deal is expected to close in the fourth quarter.

How MeridianLink performed in the second quarter

The acquisition news arrived the same day MeridianLink issued second-quarter earnings that showed the company posting a $3 million net loss. While still in the red, the number represented improvement from negative bottom lines of $4.7 million and $9.7 million on both a quarterly and year-over-year basis.        

Revenues for MeridianLink, though, increased, rising to $84.6 million, with $68.7 million coming from the lending software unit and $15.9 million from data verification solutions. Total revenue rose 3.8% from the first-quarter, when MeridianLink garnered $81.5 million. Year-over-year, numbers increased 7.5% from $78.7 million. 

The company's stock value leaped on Monday morning 24.7% from Friday's close on the heels of the announcements  to $19.80.