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Acquisitions: The Benefit of Timing

Acquisitions: The Benefit of Timing

The Benefit of Timing

When it comes to partnerships and acquisitions in multifamily, timing is everything. Mergers are most successful when both parties are at similar points in their evolutions and ready to take things to the next level. Operational alignments and tech integrations must be completed in stride, enabling both sides to immediately benefit from one another, enhance offerings and build momentum.

While some industry acquisitions merely serve to expand the corporate footprint or absorb competition, others create a more comprehensive product and empower property performance. Finding intrinsic alignments between operators, and especially property technology providers, is essential to the evolution of the industry. With more proptech entering the market, mergers and acquisitions are only logical, especially for parallel or complementary product lines.

Not every acquisition irreversibly alters the multifamily playing field, but here are some of the other top industry-shaking moves that redefined property management.

  • AvalonBay Communities and Equity Residential combined to acquire Archstone apartments in 2012, setting up both to be among the top five apartment owners.
  • RealPage acquired Rainmaker in 2017, bringing two major revenue management and market data systems together to base pricing based on real-time market trends.
  • Greystar acquired Alliance Residential's property management business in 2020, merging two of the top four multifamily operators and expanding Greystar to more than 660,000 units.
  • Alfred acquired RKW Residential in 2022, marking one of the first examples of a proptech firm acquiring a property management company.
  • RealPage acquired Knock in 2022, combining a top CRM and front office technology provider with AI and yield management expertise to establish a next-generation operating platform.
  • SmartRent acquired SightPlan in 2022, consolidating smart home and touring technology with communications, workflow and inspections platforms to create unprecedented efficiencies, as well as asset protections and oversight.
  • Grace Hill acquired Edge2Learn and Ellis Partners in Management Solutions in late 2022. This move brings two innovators in talent, learning and customer management companies together to further optimize how companies engage, empower and retain top talent.

What's Next?

Consequential and immediately effective proptech consolidations have become more common in recent multifamily history. Proptech providers are realizing it's often the fully combined forces of multifamily leaders that deliver the greatest yields in the aggregate.

  • A recent article in Commercial Observer contends that the stability of rental housing has companies scrambling for a greater market share and investors primed to fund proptech developments for the sector.
  • A GlobeSt.com article from late last year suggests that as operators continue to seek comprehensive one-stop products, more proptech players will "start scaling up and dominating spaces." Investors will also put their money into the startups they feel can win the scaling race.
  • A 2022 report from Multifamily Dive also anticipates more proptech companies following Alfred's footsteps to acquire multifamily management divisions, easing portfolio-wide implementations.

This could be another landmark year for mergers and acquisitions in the industry, if timing and opportunity allow. New proptech and software now enter the market on a regular basis, though most either mirror or enhance existing products. As those solutions prove their value, they may well be candidates for acquisition.

Some products naturally align. The consolidation of rentech, insurtech and fintech for multifamily purposes has felt inevitable for some time, but could be accelerated as the industry enters a potential period of decreasing rents and bad debt concerns. An increasing emphasis on Environmental, Social and Governance (ESG) performance and compliance will create a heightened demand for energy- and water-saving technology, possibly prompting mergers to develop comprehensive solutions. Hospitality-centric technology may also start to be absorbed by property management system (PMS) providers adapting to the current demand for flexible living options.

Collaborative efforts among proptech providers have typically optimized integrations, eliminated redundancies and reduced demands on property teams. Mergers and acquisition take those advantages a step further, with operators reaping the greatest benefits.

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This comment was minimized by the moderator on the site

I think there will be a lot of consolidation this year. Some of it will be tactical to fill it gaps and build more robust platforms, but I also think some of it will be opportunistic. While fund are still flush with cash, startups that don't have product/market fit are probably going to have trouble raising money this year and may end up selling instead. Like you said, timing matters. You know better than anyone.

  Ellen Thompson
This comment was minimized by the moderator on the site

Thank you for the shout out Lucas. Our acquisition of Edge2Learn and Ellis is a huge step in providing better performance solutions to the rental housing industry. BIG things still to come!

  Stephanie Anderson

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