In one of the biggest deals in proptech, Lessen has raised more than $500m to buy SMS Assist, creating a $2bn property services platform.
By merging the strengths of both companies, Lessen said it aimed to “continue to tackle real estate’s pain points”. The two companies will serve approximately 250,000 residential and commercial properties in the US and facilitate around 2.5m repair and maintenance orders per year. They will also bolster their offer with a broader range of property services.
Jay McKee, founder and chief executive of Lessen, said: “This deal demonstrates the increasing demand within the underpenetrated, $330bn addressable North American property services market for a unified, extensible delivery platform that provides transparency, efficiency and data-driven insights for the entire real estate ecosystem including investors, owners, managers and service providers.”
Lessen’s McKee will continue to lead the newly combined company as CEO and chair of the board of directors.
Michael Rothman, founder and chair of SMS Assist, said: “The acquisition unlocks significant value through synergies building on a long operating history and will show we are well positioned together with Jay at the helm, leading from a consistent track record of growth.”
The transaction consists of both cash and stock, with Lessen raising approximately $500m in combined new debt and equity, in addition to SMS Assist stockholders exchanging a portion of SMS stock for Lessen stock. The deal has resulted in a combined company with an enterprise value of more than $2bn.
The deal was backed by debt and equity investors including Monroe Capital, Värde Partners and Koch Real Estate Investments. Invitation Homes and American Homes 4 Rent also invested.
Brad Greiwe, co-founder and managing partner at Fifth Wall, a Lessen investor, added: “This transaction is an ideal representation of Fifth Wall’s flywheel with our limited partners, portfolio companies, commercial partnerships and fresh capital coming together to create an end-to-end industry-leading company. While proptech consolidation is far from an anomaly, a venture-backed technology company purchasing an incumbent player is not something you see every day. It is a true validator of Jay and his entire team at Lessen and their success; we look forward to their next chapter.”
Lessen said the new, combined technology platform would allow service providers, from painters to plumbers, contractors to electricians, to “act as one”, performing work at a national level not previously possible. This work will be overseen and inspected for quality by Lessen’s in-house project managers. The combined solution could help owners overcome skills shortages, reduce admin, and improve efficiency.
More than 25,000 professionals have already joined Lessen and SMS Assist’s networks. The deal will also allow Lessen to enhance its materials sourcing and last-mile logistics capabilities to unlock key growth opportunities for clients and contractors.
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