IAC/InterActiveCorp (IACI) reports early this morning that it will spin out LendingTree as a part of a reorganization that will split IAC into five public firms (WSJ subscription). Barry Diller makes a couple of interesting statements in this announcement. Like a concern over complexity and lack of clarity in their conglomerate of businesses:

In a statement Monday, Mr. Diller said that "while we’ve created a lot of value, I’ve always believed our complexity and many mouthfuls of sentences to explain who we are and what our strategy is have hampered clarity and understanding with all our constituencies, particularly investors."

and a confession that their transactional businesses where seed capital for strategic business acquisitions and may be less valuable to him long-term:

He added, "One of the reasons we’ve stayed with some of our more transactional businesses is that we needed their earnings to allow us to invest in emerging Internet businesses. Now that we have real scale in the pure Internet units, it makes nothing but sense to me to reorganize the whole."

So, what does this mean for LendingTree and its consumers and clients?

1. As with most of these types of announcements, they do not occur spontaneously. Most of the changes relevant to this restructuring has already occurred:
   • Secure strong management team
   • Cut expenses dramatically to fit in new capital structure
   • Pump up your existing revenue if possible
   • Rally your clients around your new strategy
   • Get a CFO to watch the top and bottom line closely
2. Diller feels he has positioned each business unit for success and independence (WSJ subscription):
   • Mindy Grossman, Sean Moriarty, C.D. Davies and Craig Nash will continue as CEOs of HSN, Ticketmaster, LendingTree and Interval International, respectively. Bret Violette will continue as president of RealEstate.com, which will be part of LendingTree.

     Mr. Diller said, "Each of these spun-off businesses is in fact a distinct business sector, and each will benefit from standing on its own, with its own capital structure, its own currency which will enhance its ability to attract and retain superior talent and make acquisitions, and a focused story investors can clearly understand and buy into."

3. LendingTree should have the opportunity to focus more closely on their business model with more flexibility to manage the volatility of a transactional revenue model. Whereas, other  transactional businesses encased within larger conglomerates like Experian/LowerMyBills may have to take less client friendly and more Experian shareholder appealing tack line.
4. LendingTree will undoubtedly be able to pursue more innovative, LendingTree specific, strategies and tactics in lead generation.
5. LendingTree, unlike other mortgage lead providers, will have support from non-mortgage specific business units (HSN, TicketMaster, and Interval International) to smooth the chop in the mortgage market, yet continue to effectively address the market.

All in all, I think this is a positive move and will benefit LendingTree and their network.

Tags: lendingtree, iaci, interactivecorp, lowermybills, experian, hsn, ticketmaster, cd davies