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Intuit (INTU +2%) is not monkeying around. Just nine months after closing on its acquisition of Credit Karma, the small business financial software giant last night announced that it will acquire Mailchimp, which offers a marketing automation platform and email marketing service for small and mid-market businesses. Mailchimp helps clients digitally promote their business across email, social media, landing pages, ads, and websites, all from one place.

Why does this deal make sense for Intuit?

• Intuit believes the deal will accelerate two of its previously-shared strategic "Big Bets": to become the center of small business growth and to disrupt the small business mid-market. Mailchimp helps clients establish an online presence, market their business, and manage customer relationships, and it also provides analytics.
• Intuit says that two-thirds of small businesses consider finding new customers to be their biggest obstacle; 25% struggle to retain existing customers, yet almost three-quarters of small businesses have not adopted a customer relationship management service, so there is untapped potential in this market. Intuit has great financial software but lacks a marketing platform that it can offer to its huge swath of small business clients. Mailchimp will fill that void.
• It's all about cross-selling. Imagine small businesses being able to tap purchase histories from QuickBooks and feed that data into their Mailchimp marketing platform to generate additional sales. Intuit's experience in cross-selling includes solid efforts to leverage its recent Credit Karma acquisition. Since the acquisition closed, TurboTax customers and migrating Turbo users accounted for 40% of new Credit Karma members, significantly accelerating new member growth.
• Mailchimp is huge, with 13 mln total users globally, 2.4 mln monthly active users, and 800,000 paid customers. Through the deal, Intuit will be able to market its current products to a huge customer base. Intuit's massive scale should allow Mailchimp to accelerate its growth. Also, approximately 50% of Mailchimp's customers are situated outside of the US, so this deal will bolster Intuit's international expansion plans.

Bottom line, we are favorable on the the deal, as it fits well with Intuit's small business universe. This deal fills the company's need for a marketing product that can be offered to its small business clients. It's also easy to see how the cross-selling magic potion will be stirred. All of Intuit's products are geared toward small- and medium-sized businesses, with each product serving a different need. The one caveat is that $12 bln seems like a rich price to pay. Intuit did not disclose Mailchimp's annual sales, so it's tough to compute the valuation being paid. However, based on the stock's reaction, investors appear to be pleased with the deal.