SMS Assist Acquisition: Key Details, Impact, and What Comes Next

Lessen's acquisition of SMS Assist marks a pivotal moment in the property technology and services industry. Valued at $950 million, this strategic move combines the strengths of both companies, creating a unified platform capable of serving 250,000 properties and handling 2.5 million maintenance orders annually. This merger is set to enhance operational efficiency and expand service offerings, benefiting property owners and service providers alike.

What Is SMS Assist?

Founded in 2003, SMS Assist provides comprehensive property maintenance solutions for both commercial and residential properties. Its core services include facilities management, property repairs, maintenance, and capital projects. A key differentiator is its extensive vendor network, which spans over 30,000 vendors, and its advanced technology platforms like One by Lessen and Lessen360™. SMS Assist is recognized for its high customer satisfaction and broad service coverage, managing over 280,000 properties and completing more than 3 million work orders annually.

Who Acquired SMS Assist?

Lessen is a prominent provider of property maintenance solutions and services, focusing on simplifying and optimizing real estate management. The company offers commercial facilities management, residential property maintenance, and advanced technology platforms like One by Lessen and Lessen360™. With a nationwide network of qualified vendors, Lessen serves over 280,000 properties and completes more than 3 million work orders annually. Its strong market position is underscored by a high customer satisfaction rating and recognition as one of the fastest-growing companies.

When Was SMS Assist Acquired?

Lessen acquired SMS Assist on January 12, 2023. This acquisition aligns with the broader trend of consolidation in the PropTech industry, where companies are merging to offer comprehensive, tech-enabled solutions. The timing is significant as it follows a period of mixed developments in the sector, including notable investments and some setbacks, indicating a robust market for property technology innovations and services.

Why Was SMS Assist Acquired?

• Market Expansion: The acquisition allows Lessen to serve a national footprint of approximately 250,000 residential and commercial properties and facilitate around 2.5 million repair and maintenance orders per year. This significantly broadens their market reach and service capacity, enabling them to enter new markets and expand their client base.
• Technology Integration: SMS Assist's mature technology will be integrated with Lessen's existing platform, creating a unified application that enhances capabilities for customers and vendors. This integration will help overcome skilled labor shortages, reduce administrative burdens, and provide real-time project updates, making the combined entity more efficient and capable.
• Competitive Advantage: The merger positions Lessen as a more robust player in the property services market by combining their end-to-end solutions with SMS Assist's advanced facilities maintenance technology. The combined network of over 25,000 professionals allows for rapid access to work and payment, reducing expenses for contractors and enhancing service delivery efficiency, quality, and speed.

Acquisition Terms

• Acquisition Price: $950 million
• Payment Method: The transaction was financed through a combination of cash and stock, with Lessen raising approximately $500 million in new debt and equity.
• Key Conditions or Agreements:
  • The combined company will have an increased valuation of over $2 billion in enterprise value.
  • Debt and equity investors backing the transaction include Monroe Capital, Värde Partners, and Koch Real Estate Investments.
  • Clients who invested in the deal with Lessen include American Homes 4 Rent and Invitation Homes.
  • Jay McKee, founder and CEO of Lessen, will continue to lead the newly combined company as CEO and serve as Chairman of the Board of Directors.
  • The acquisition aims to provide a unified, extensible delivery platform that offers transparency, efficiency, and data-driven insights for the real estate ecosystem.
  • The combined technology platform will allow service providers to perform work at a national level, overseen by Lessen’s in-house project managers.
  • The merger aims to overcome skilled labor shortages, reduce administrative burdens, and provide real-time project updates.

Impact on SMS Assist

The acquisition of SMS Assist by Lessen has led to significant changes in operations and management. Jay McKee, CEO of Lessen, continues to lead the combined company, which has integrated the strengths of both entities into a unified platform. This merger has resulted in a streamlined management structure, with 80% of the C-suite being new hires post-transaction. Operational efficiencies have also been achieved, reducing the headcount from 1,800 to 1,200, although an increase is expected in 2024. The combined technology platform now allows service providers to operate on a national level, enhancing service delivery and operational efficiency.

The merger has expanded the product offerings and services of the combined entity. The new platform serves approximately 250,000 properties and handles around 2.5 million maintenance orders annually. This integration has enhanced materials sourcing and last-mile logistics capabilities, unlocking growth opportunities for clients and contractors. Customer reactions have been positive, with improved operational results and high satisfaction scores. Employees have shown interest in the revamped management team, although some turnover occurred due to redundancies. For founders considering business transitions, tools like Sunset can assist in managing such processes compliantly and efficiently.