RealPage (NASDAQ: RP) is one of the leading providers of property management services. The product includes solutions for residential real estate property management as well as commercial and mixed-use solutions. Its combination of data and services for real estate caught the attention of Thoma Bravo, a private equity firm that has acquired RealPage for $9.6 billion. Current RealPage shareholders will receive $88.75 in cash per share, a nearly 31% premium over the price before the deal was announced. The price is higher than RealPage's market cap before the sale, which shows that Thoma Bravo was willing to pay full value for RealPage. The company is also not in any type of distress.
The transaction will still have to pass a regulatory review. The RealPage Board of Directors has a 45-day window to shop for a better offer, but they have already approved the arrangement. Shareholders will vote on the agreement in early 2021, and the deal is expected to close in the second quarter of 2021. After the transaction, RealPage will be a private company, no longer trading on the NASDAQ.
Thoma Bravo is a private equity firm. It has over $73 billion in assets under management and a focus on software and technology. It also has a consistent track record of acquisition, having purchased over 270 software and tech companies.
How to build a giant
Thoma Bravo's acquisition target, RealPage, has a long history. The company was founded in 1998 and went public in 2010. Its performance has been modest; it launched at $15 per share and was trading at $67.83 before the announcement of the merger. It currently has around 12,000 customers, and its most recent earnings put revenue at $298.1 million, up 17% from last year.
Like many other real estate technology companies, RealPage saw increased growth during the pandemic, partly because many landlords and property managers needed to be able to make decisions without visiting properties in person.
What's likely most appealing to Thoma Bravo is RealPage's history of success with data management. It offers services for tenants who want to pay rent or request maintenance, but perhaps the most valuable portion of RealPage may be its ability to deliver real-time data on lease transactions. That data provides a window into what the market is doing and where opportunities may lie in the future.
"RealPage's industry-leading platform is critical to the real estate ecosystem and has tremendous potential going forward," said Orlando Bravo, founder and a managing partner of Thoma Bravo in an interview.
RealPage is based in Richardson, Texas, where it leased a 400,000-square-foot home office in 2015. It's expected that RealPage Chairman and CEO Steve Winn will continue to run the company after the acquisition.
What it means for the industry
In the last quarter of 2020, we've seen increased mergers and acquisitions. What this latest deal shows is how valuable companies that deal in real estate data truly are -- good news for investors. One of the values of RealPage is that it can help Thoma Bravo identify other potentially lucrative targets.
In a release on the acquisition, Scott Crabill, a managing partner at Thoma Bravo, said, "We look forward to applying Thoma Bravo's operational and investment expertise in software to help drive RealPage's continued growth and identify attractive M&A opportunities."
We've seen a flurry of M&A in recent weeks: HousingWire acquired RealTrends. Lone Wolf Technologies snapped up W+R Studios, and Realtor.com nabbed Avail. It's not uncommon to see mergers and acquisitions at the end of a calendar year, but it's an encouraging sign in this year when so much in the real estate industry has seemed uncertain that large firms are seeing the value in real estate data.