Software maker for lenders, MeridianLink, seeks $3B+ valuation

TECHNOLOGY: Software maker for lenders; $3B valuation

MeridianLink Inc., a rapidly growing Costa Mesabased maker of software for the financial industry, is making plans to go public with an initial public offering that could value the company at $3 billion or more.

The firm, founded in 1998 by a pair of students who met at the University of California, Irvine, on April 30 disclosed plans to go public on the New York Stock Exchange under the ticker symbol MLNK.

The IPO, underwritten by BofA Securities, Credit Suisse and Citigroup, among others, listed a placeholder $100 million value for the amount of funds it expects to raise. IPO market watchers expect the offering to ultimately raise around $350

million. An expected price for the company’s stock hasn’t been disclosed.

The company will continue to be controlled by San Francisco-based private equity firm Thoma Bravo following the IPO, whose plans for taking the company public have been in the works since December, regulatory filings indicate.

Thoma Bravo invests in software and technology-enabled services sector; among its other area holdings are Costa Mesa’s J.D. Power & Associates and Irvine’s Kofax

Inc.

It purchased Meridian Link in 2018, paying $228 million in a pair of transactions, regulatory filings indicate.

Officials familiar with the company’s IPO plans told Reuters in February that Thoma Bravo valued the financial software provider at more than $3 billion, including debt.

The most valuable public company currently based in Costa Mesa is restaurant operator El Pollo Loco Holdings Inc. (Nasdaq: LOCO), which counts a roughly $620 million market cap.

The IPO plans for Meridian Link mark the latest in a series of tech companies in Orange County that have gone public or announced plans to join the public markets to raise capital (see story, this page).

Credit Union Focus

Meridian Link makes loan origination software for credit unions, banks and other mortgage lenders; it says its products help streamline loan decision-making, loan origination, and customer collection workflows.

The company’s services are used by banks and credit unions to set up digital lending and deposit accounts, among other services; it says it serves 63 of the top 100 credit unions in the country. Meridian Link’s client base included 1,925 customers as of Dec. 31. Notable customers include the Los Angeles Federal Credit Union, First Bank of Ohio and the USF Federal Credit Union in Florida, according to the company’s website.

Local real estate and data-related partners it works with are Costa Mesa’s Experian and Irvine’s Core Logic.

The company reported net revenue of $152.7 million and $199.3 million for 2019 and 2020, respectively, representing a growth rate of 30.5%. It has benefited from the popularity of online banking and digital payments during the COVID-19 crisis, according to a recent report in Reuters.

It counted about $38 million of cash on hand as of the end of 2020, and carried nearly $520 million in debt.

Meridian Link told the SEC the proceeds from the IPO would be used to pay down debt, general corporate purposes, and potentially the acquisition of “complementary businesses, products, services or technologies.”

UCI Start

Meridian Link had a total of 472 employees as of Dec. 31. It leases about 57,000 square feet of space in Costa Mesa at two properties along Sunflower Avenue, including one building owned by the company’s co-founder and chief strategy officer, Tim Nguyen.

Nguyen, 45, turned over the CEO role at the company in 2019 to Nicolaas Vlok, a native of South Africa who has been an operating partner with Thoma Bravo since June 2018.

Vlok, 48, counts other Orange County ties. He was previously president and chief executive officer of Vision Solutions Inc., an Irvine-based data recovery software maker that was previously a Thoma Bravo portfolio company.

Nguyen and Meridian Link’s other cofounder, Binh Dang, met while in school at the UCI, where they studied computer science. They first started the company as a consultant before growing into a software developer. Dang is no longer with the company.