News of the $10.2 billion acquisition of rental property management platform, RealPage by leading private equity firm, Thoma Bravo, offers the latest evidence that the wave of growth and investment in Built World tech is entering a new phase of bigger, broader solutions fueled by investment from more large acquirers. With more built industry tech companies valued in the billions serving the different life cycle phases of building needs and offering more fully developed solutions tailored to specific building and infrastructure assets types, the stage seems set for more mergers and acquisitions of the later stage companies and also more bolt on acquisitions in the earlier stages.
More Big Investors Mean More Competition for Deals
With more than $73 billion in assets under management, Thoma Bravo’s entry into the ecosystem brings another major, deep pocketed investor into the mix and surely signals other of the biggest private equity firms will become more involved as well. Another recent example of the trend of more large investors from outside the traditional industry pool came with the recent announcement of the merger of smart glass maker, view, with a Cantor Fitzgerald-backed special purpose acquisition corporation (SPAC) in a deal valued at $1.6 billion. The involvement of more large acquirers likely means more investment and also more competition for deals in the sector. It also signals more premium pricing opportunities for targets. Indeed, it appears that the acquisition price for RealPage will be at more than a 27% premium to its all time high.
Many Opportunities in Building Operations and Management
As our annual Building Tech 50 List illustrates, operations management within the apartment real estate sector is just one of many types of building and infrastructure management and maintenance platforms. In fact, we are tracking more than 75 solutions in our company directory. There are office, healthcare, and infrastructure management solutions as well as energy management, community management, and other types of solutions. Then, as the case of View illustrates, there are also adjacent opportunities in the associated smart building internet of things, as that software begins integrating with the many components parts of buildings. Just in the asset management stage of the building life cycle, there appears to be considerable room for growth, even for a company that already has the significant market capitalization of RealPage.
Growth May Also Bring More Integration Across the Life Cycle of Assets.
Valuations for RealPage point to bigger opportunities down the road, not only as companies like RealPage expand into other services and sectors in buildings operations, but also as they expand across the life cycle of buildings. To-date, platforms governing design, fabrication, equipment, construction, operations, and other essential functions in the life cycle of real assets still remain largely separated by different applications. Slowly, however, that is all changing with deals like like PROCORE ‘s merger with HonestBuildings, or Bentley’s Acquisition of Alworx , or with efforts by companies like Kahua to develop both project management and asset management solutions on one platform.
Exploring the Smart Buildings Sector At Our Buildings Conference in April.
With more large companies investing in the sector and more emerging technology offering solutions on the soft and hard side of smart buildings, the world of high performance, smart buildings will clearly be much more active in the year to come. BuiltWorlds will be exploring that activity in depth at our annual Buildings Conference to be held digitally this April. We will also be continuing our monthly Buildings Analyst Call to help our members stay on top of fast moving trends in this part of the Buildings and Infrastructure ecosystem.
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