Procore’s $500m bid to fix construction payments crisis
Responding to the sector’s notoriously slow payments, construction management software provider Procore has agreed to acquire Levelset for $500m.
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Levelset aims to simplify compliance payment processes in construction, thereby decreasing financial risks and improving a company’s cash flow.
Announcing the acquisition, Procore, which bought Levelset with the intention of developing further financial products, said that “vast sums of critical capital” are trapped in construction due to the risks and complexity of moving money between stakeholders.
Construction, on average, takes longer than any other industry to pay its bills and invoices and to receive payments, according to PwC in 2019.
In the US, liens are foundational to compliance workflows. Construction stakeholders spend considerable time and energy managing lien rights — from those downstream looking to preserve lien rights and having to comply with the nuances of lien law that varies from state to state, to upstream stakeholders constantly procuring lien waivers at the point of payment to ensure their projects are free and clear.
Similar payment challenges and complexities also exist globally, Procore said.
Levelset has more than 250,000 users and has been deployed on more than 6.5 million construction projects, according to the company. Procore first partnered with the software platform in April 2018.
Tooey Courtemanche, founder and CEO of Procore, said: “Construction work is hard enough – getting paid shouldn’t be. Levelset helps the construction industry get paid faster, and their offering will be a perfect addition to the Procore platform.
“This acquisition will also give Procore access to industry data, including payments and compliance activity, allowing us to deliver valuable risk intelligence to our customers, and to develop innovative financial products.”
Procore agreed to acquire Levelset for $500m, comprising $425m in cash and $75m in Procore common stock.
The deal is expected to close in the fourth quarter of the year.