Lessen Acquires SMS Assist in Largest Proptech Deal to Date

Property services and facilities maintenance companies join in a cash and stock transaction with a valuation of more than $2 billion


Tech-heavy property services firm Lessen announced Thursday that it has acquired SMS Assist, an industry-leading facilities maintenance technology company, in a $950 million deal. The deal is the largest merger in proptech history, according to the companies.

The transaction consists of cash and stock, with Scottsdale, Ariz.-based Lessen raising approximately $500 million in combined new debt and equity, in addition to SMS Assist stockholders exchanging a portion of SMS stock for Lessen stock, resulting in an increased combined company valuation of more than $2 billion in enterprise value. Debt and equity investors who backed this transaction include Monroe Capital, Värde Partners and Koch Real Estate Investments. Additionally, clients who invested in the deal with Lessen include Invitation Homes and American Homes 4 Rent, among others.

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“We’re thrilled to have raised $500 million from a valued network of investors who provided us not only financial but strategic partnership in acquiring SMS Assist for $950 million,” said Jay McKee, founder and CEO at Lessen.

By merging the complementary strengths of the companies, Lessen, which was founded in 2019, will continue to provide its customers with a scalable, tech-enabled, enterprise solution for commercial and residential services, according to today’s announcement of the deal. The two companies will serve a national footprint of approximately 250,000 residential and commercial properties and facilitate approximately 2.5 million repair and maintenance orders per year — in tandem with bolstering a broader range of property services.

“Lessen recognized early on the opportunity to provide an enterprise-level solution that solved the real estate industry’s long-tenured property services pain points,” said McKee. “This deal demonstrates the increasing demand within the underpenetrated, $330 billion 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.”

Following the close of the transaction, Lessen’s McKee will continue to lead the newly combined company and serve on its board. Michael Rothman, founder and chairman of SMS Assist, which has offices in Chicago and Phoenix and was founded in 1995, said in the announcement, “The acquisition unlocks significant value through synergies building on a long operating history and will show we are better positioned together with Jay at the helm, leading from a consistent track record of growth.”

The two companies’ combined technology platform will allow the many service providers — including contractors, painters, plumbers and electricians — to act as one, performing work at a national level. This work will be overseen and inspected for quality by Lessen’s in-house project managers. The combined solution is designed to help owners overcome skilled labor shortages, while simultaneously reducing administrative burden and providing efficiency and real-time project updates.

Evercore acted as the exclusive financial adviser to Lessen, and Fenwick & West acted as legal counsel. J.P. Morgan Securities financially advised SMS Assist, and Katten Muchin Rosenman, as well as Skadden, Arps, Slate, Meagher & Flom, acted as legal advisers.

“I think what makes us so excited about this deal is it’s not only a validation of Lessen, but it’s a validation of proptech, and the growing size, scale and complexity of businesses in proptech,” said Brendan Wallace, co-founder and managing partner at Fifth Wall, a current Lessen investor. “It’s also a testament to the power of partnership between fast-growing technology companies like Lessen and SMS, and large strategic partners. 

“You have this watershed transaction which represents a high-water mark for proptech,” Wallace added. “It also represents this incredibly strategic transaction that will accelerate the residential industry and a validation of Fifth Wall’s belief in the power of partnership. … Obviously, it’s a fantastic outcome for Fifth Wall’s largest investment, where we lead the Series A and Series B [for Lessen].”

Brad Greiwe, co-founder and managing partner at Fifth Wall, added in a statement: “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,” Greiwe said.

Clarification: Lessen originally announced a $500 million raise to acquire SMS Asset in a news release, and later clarified that the total acquisition cost was $950 million.

Philip Russo can be reached at prusso@commercialobserver.com.