Lessen services startup

Lessen has a network of service providers, including contractors and electricians. Credit: Greyson Joralemon


Services startup forms $2bn business in merger

Lessen has acquired SMSAssist, a facilities maintenance tech company, in the largest private-to-private proptech M&A deal in history.

The combined business gives real estate access to a network of 25,000 service providers – including contractors, painters, plumbers and electricians – across the US.

Lessen, which provides outsourced real estate services, said the business will help real estate owners overcome labour shortages, reduce administrative burden and provide efficiency and real-time project updates.

The transaction consisted of both cash and stock, with Lessen raising about $500m in debt and equity from investors including Monroe Capital, Värde Partners and Koch Real Estate Investments. The deal values the combined business at more than $2bn.

Brad Greiwe, co-founder and managing partner at Fifth Wall, a current Lessen investor, said that while proptech consolidation is “far from an anomaly”, a venture-backed company buying an incumbent “is not something you see every day”.

M&A in proptech has been heating up in the last year, with the number of deals in H1 2022 up 12.2%, year-on-year, according to Hampleton Partners. This included a massive $13.1bn acquisition of Black Knight by Intercontinental Exchange in May 2022.

More consolidation is expected as economic pressures mount. In its latest proptech M&A report, Hampleton managing director Axel Brill, wrote: “We do… expect economic pressure to entice companies to accelerate innovative initiatives and rush to drive operational efficiency.

“In doing so, buyers have been using M&A to prepare themselves for a transformed economic atmosphere. They intend to acquire competitive capabilities through acquisitions before interest rates rise even further, while also disposing non-care assets to cut unnecessary costs before the economy considerably declines.”

Between Lessen and SMSAssist, the two companies provide services for about 250,000 residential and commercial properties and facilitate about 2.5m repair and maintenance orders per year.

Jay McKee, founder and CEO of Lessen, said: “This deal demonstrates the increasing demand within the under-penetrated $330bn addressable North American property services market for a unified, extensible delivery platform that providers transparency, efficiency and data-driven insights for the entire real estate ecosystem, including investors, owners, managers and service providers.”

McKee will continue to lead the company as CEO and serve as chairman of the board of directors.

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