Goldman Sachs: GreenSky purchase shows the benefit of buy vs build

Goldman Sachs: GreenSky purchase shows the benefit of buy vs build

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Home improvement project bills can escalate quickly. In the US, checkout stands at the likes of Home Depot promote the services of GreenSky, a point-of-sale lender that allows customers to pay off their shopping balance over time. Access to credit is not such an issue for Goldman Sachs, the Wall Street house trying to build a new wing.

On Wednesday, Goldman announced that it would acquire fintech platform GreenSky. The purchase price of $2.2bn implies a greater than 50 per cent premium. But the Wall Street titan is paying in its own shares, which have risen 82 per cent in the past two years.

Disrupters such as GreenSky have struggled as public companies. Their technology and relationships make them hot acquisition targets for legacy financial services companies trying to keep up with consumer experiments in non-traditional financial institutions.

The irony of fintechs is that they are entirely dependent on the incumbents they are trying to disrupt. GreenSky, which also offers loans for medical procedures, receives financing from funding partners such as Bank of Montreal. Its app carries out the underwriting and the core of its revenue comes