Plaid weighs IPO nearly 3 years after walking away from Visa sale
Plaid has been busy since walking away from its $5.3 billion sale to Visa in January 2021, according to Zach Perret, Plaid CEO and cofounder. Perret was one of thousands of executives who attended Money20/20 last week. He spoke to Fortune between panels.
In January 2020, Visa announced plans to buy Plaid, which provides APIs that help startups connect to users’ bank accounts, for $5.3 billion. But a DOJ lawsuit to block the deal caused the companies to call off the merger one year later. “That was a hard decision because there were a lot of people at Plaid that were excited about it or that were excited about the liquidity that was coming from it,” Perret said.
“As I look back on it now, you know, I think we made the right choice,” he added.
Plaid’s core business is connecting the bank accounts of consumers to a fintech application. That app could be built by a bank or a startup or something in between, Perret said. “We've always had competitors, but I think our core businesses has continued to grow really well since [January 2021],” Perret said.
The company has added three major product areas since 2021, he said. Plaid acquired Cognito, an identity verification and compliance startup, for $250 million in January 2022. Plaid also expanded into credit and credit analytics by building products to help banks make eligibility lending decisions. The company also improved its payments offerings, rolling out Signal in late 2022. Signal uses machine learning to analyze risk in ACH payments, making them quicker and more secure. (Plaid bought Flannel, which built APIs for money transfers, in 2021.) Plaid also supports FedNow, the round-the-clock payment and settlement service that the Federal Reserve introduced in July.
Perret said he expects Plaid will do more M&A but isn’t in any immediate rush. “Where we find pieces of the product portfolio that are better built through acquisition than building internally, we certainly would consider it,” he said.
Artificial intelligence was one of the biggest themes of this year’s Money20/20. Ali Ghodsi, cofounder and CEO of Databricks, thinks AI will eventually be more transformational than the Internet and bring about the biggest changes since the Industrial Revolution. But Perret is more circumspect. “AI will inevitably have a huge impact on consumers to financialize. And I'm eager to see where it lands, but I don't think we know yet,” he said.
Plaid is perennially considered a likely candidate to go public. Earlier this month, the company hired Eric Hart, a former Expedia CFO, to serve as its first chief financial officer. Plaid had been interviewing CFO candidates for much of 2023. The company has had leaders overseeing the functions Hart is overseeing but hadn’t reached a point of maturation where a CFO made sense, a spokeswoman said. “We certainly would consider going public. We haven't attached a timeframe to that,” Perret said.
Earlier this fall, the IPO market experienced a false start when three companies—Arm Holdings, Instacart and Klaviyo—went public. While the trio delivered strong debuts, all three are currently trading below their offer prices. This poor performance has chilled IPOs, which have been largely dormant since 2021. Plaid, like everyone else, is watching the market, Perret said. “An IPO is certainly an aspiration of ours,” said Perret who mentioned a direct listing or traditional IPO as considerations. “There are some good options out there. We'll do the work and figure out what the right answer is for us,” he said.
SCOOP: Togetherwork, an Atlanta, GA-based provider of group management software and payments, is seeking a buyer, according to five banking and private equity sources. The company is not officially up for sale but is meeting with strategics and select sponsors, the people said. William Blair is advising on the unofficial process, they said. GI Partners, a private investment firm, acquired Togetherwork in 2018 from Aquiline Capital Partners. Togetherwork is marketing $100 million in 2024 Ebitda; it is expected to sell for 15 to 20 times that or up to $2 billion, the people said.
See you tomorrow,
Luisa Beltran
Twitter: @LuisaRBeltran
Email: luisa.beltran@fortune.com
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This story was originally featured on Fortune.com
