RealPage Acquired by Thoma Bravo: RealPage, Inc. (Previously Traded on NASDAQ as "RP") is engaged in offering on-demand property management solutions to aid owners and managers of single-family and a broad array of multi-family rental property types to handle their screening, marketing, pricing, leasing, accounting, purchasing, and other property operations. On 22 April 2021, RealPage announced the completion of its acquisition by Thoma Bravo, an American private equity investment capital firm, that has completed more than 300 software deals worth greater than $85 billion since 2003. On 21 April 2021, the stock of RP closed at $88.72.

Deal Details: Post the completion of the buyout, RealPage shareholders were eligible to obtain $88.75 in cash per share, which is 30.8% over the closing stock price on December 18, 2020. This also, depicts a 36.5% premium over RealPage’s 30-day volume-weighted average share price all through 18 December 2020. The value of the deal is worth ~$10.2 billion in an all-cash transaction, which incorporates net debt. The deal was previously declared on 21 December 2020, and RealPage’s stakeholders approved the transaction on 8 March 2021.

Post the completion of the all-cash deal, RealPage ceased trading on the Nasdaq stock exchange and became a privately held company. Notably, BofA Securities were the financial advisor to RealPage.  Legal counsel to RealPage were Wachtell, Lipton, Rosen & Katz. Further, the transaction was funded by Goldman Sachs & Co. LLC., which also acted as financial advisor to Thoma Bravo.

Deal Benefits: RealPage is one of the leading worldwide providers of software and data analytics to the real estate industry. With the completion of the deal and Thoma Bravo’s deep experience with software companies, both the firms remain committed to greater resources to expand and enhance its sales platform of data analytics and on-demand solutions.  This provides RealPage a competitive advantage. The companies would drive industry-leading margins by leveraging this unique business model and will better serve the next generation of multifamily operators and residents.

Key Risks: Despite the technology support, the impact of COVID-19 led pandemic is affecting the rent-paying capabilities of residential tenants. Further, increasing expenditure due to virus outbreak are potential headwind. Additionally, competition from peers adds to the woes.

A Quick Look at RealPage’s 4QFY20 Key Financial Highlights: During the quarter, the company reported non-GAAP net earnings of $0.50 per share, which increased 4% from the previous corresponding period. Revenues for the quarter came in at $298.1 million, up 17% on a year over year basis, owing to the negligible impact of COVID-19 and higher demand of RP’s solutions.  The company generated ~$68.44 million of cash from operating activities in 4QFY20. It had $594.7 million of cash, and cash equivalents as of December 31, 2020.

Revenues & Gross Profit Highlights (Source: Company Reports)

Stock Details: Given their deep industry expertise, Thoma Bravo is an ideal partner for RealPage, and both the companies remains optimistic to work together as they chart the next phase for their company. Going forward, investment in product development and sales and marketing will remain high to benefit from the ever-changing environment of the way renters live and work in a post-COVID world. The stock was last traded at $88.72.

RP Daily Technical Chart (Source: Refinitiv, Thomson Reuters)

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