Levelset Acquisition: Key Details, Impact, and What Comes Next

Procore Technologies has acquired Levelset in a deal valued at approximately $500 million. This strategic move aims to integrate lien rights management into Procore's construction management platform, enhancing compliance workflows and improving payment processes. The acquisition is expected to significantly impact the construction industry by streamlining complex compliance tasks and ensuring timely payments for projects.

What Is Levelset?

Founded in 2012, Levelset provides tools and resources to help contractors and suppliers get paid faster on construction jobs. Its core products include Lien Rights Management, Lien Waiver Solutions, Job Research, and Risk Intelligence. Unique selling points include comprehensive payment tools, extensive educational resources through the Payment Academy, and a supportive community for professionals. Levelset's integration with Procore further enhances its service offerings, making it a standout in the construction payment industry.

Who Acquired Levelset?

Procore is a leading provider of construction management software, dedicated to advancing the construction industry through technology innovation and a global community of groundbreakers. Its key products include solutions for preconstruction, project execution, resource management, financial management, and construction intelligence. Procore's platform is used in over 3,000,000 projects across 150+ countries, making it highly influential in uniting stakeholders and improving project efficiency and safety from start to finish.

When Was Levelset Acquired?

Procore announced its acquisition of Levelset on September 22, 2021, and completed the transaction on November 3, 2021. This acquisition occurred during a period when the construction industry was grappling with slow payment processes and complex compliance workflows. By integrating Levelset's lien rights management into its platform, Procore aims to address these challenges, aligning with the industry's broader trend towards digital transformation and improved financial management.

Why Was Levelset Acquired?

• Market Expansion: The acquisition of Levelset by Procore represents a significant market expansion for Procore. By integrating Levelset's lien rights management capabilities, Procore can offer more comprehensive solutions to its customers, potentially attracting new clients and expanding its market share in the construction management software industry. This move allows Procore to enhance its platform and reach a broader audience, offering enhanced services to both existing and new customers.
• Technology Integration: The acquisition will integrate Levelset’s lien rights management technology into Procore’s construction management platform. This integration will enable Procore to manage complex compliance workflows and improve the payment process in construction, providing valuable risk intelligence and innovative financial products to its customers. The technology from Levelset will help construction companies navigate the complex processes associated with securing lien rights and payments, thereby streamlining operations and reducing delays.
• Competitive Advantage: By acquiring Levelset, Procore gains a competitive advantage in the construction management software market. The addition of lien rights management to its platform differentiates Procore from its competitors by offering a unique and valuable service that addresses a critical pain point in the construction industry. This strategic move not only enhances Procore’s product offerings but also strengthens its position as a leader in construction management solutions, attracting more customers seeking integrated construction management solutions.

Acquisition Terms

• Acquisition Price: Approximately $500 million.
• Payment Method: The transaction includes approximately $425 million in cash and approximately $75 million in Procore common stock.
• Key Conditions or Agreements:
  • The acquisition is subject to customary closing conditions, including adjustments for working capital, transaction expenses, cash, and indebtedness.
  • Regulatory approval is required for the transaction to close.
  • Additional details and terms will be available in a current report on Form 8-K and in Procore’s Quarterly Report on Form 10-Q for the quarter ended on September 30, 2021, to be filed with the Securities and Exchange Commission.

Impact on Levelset

The acquisition of Levelset by Procore has led to significant changes in operations and management. The Levelset team has been integrated into Procore, continuing their mission under the new organizational structure. This integration aims to enhance Procore's platform by adding lien rights management capabilities, streamlining compliance workflows, and improving payment processes in construction projects. The merger is expected to bring innovation to the industry, particularly in reducing compliance burdens and payment delays, as highlighted by both companies' CEOs.

In terms of product offerings, the acquisition has expanded Procore's capabilities to include comprehensive lien rights management, providing customers with a more robust solution for managing complex compliance workflows. Levelset's existing products, such as Lien Rights Management and Risk Intelligence, will continue to be offered, now enhanced by Procore's extensive platform. Employee reactions have been positive, with Levelset's CEO expressing excitement about the potential for innovation. Customers are expected to benefit from improved payment processes and reduced financial risks, aligning with the broader trend towards digital transformation in the construction industry.

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