Stone Point Capital is purchasing Vista Equity Partners’ stake in real estate technology company Lone Wolf, whose keystone products include a transaction management platform and back office software for real estate brokerages. The firms declined to disclose the terms of the transaction.
The exit comes a week after Vista Equity Partners’ billionaire CEO, Robert Smith, reached a $140 million settlement with the U.S. Department of Justice over a years-long criminal tax investigation.
Jimmy Kelly | Photo credit: Lone Wolf
Lone Wolf will retain its management team, including CEO Jimmy Kelly, who told Inman that the new investment partner will “be great for the continued growth of our business.”
“Our first initiative with our new partner is really to accelerate that and deliver solutions to our existing customers,” Kelly said.
With its new backer, Lone Wolf is first focused on investing in the core platform it offers to customers today, to make sure its current product offerings are best in class, according to Kelly. Those current products include back-office solutions, transaction management, e-signature and a machine learning-powered data and analytics platform.
Kelly wouldn’t reveal too much about the company’s plans for the potential influx of new capital that a new investor provides, but did say that Lone Wolf will continue to focus on bolstering its agent solutions.
“We’ve got strong relationships with a number of associations and MLSs and what they’re focused on is making sure that they’re delivering something to their members,” Kelly said. “We think that we can help extend that solution to make an agent’s life easier.”
From that core platform — where the transaction is the center of the universe — Lone Wolf plans to continue to look at solutions that extend outward from the transaction, whether it’s lead generation tools, website tools or a customer relationship management platform (CRM).
“We partner with a number of the leading providers in that space today,” Kelly said. “We can continue and will continue to partner, but we also might look to extend the solutions that we bring to market and either build or buy something in that arena.”
For Lone Wolf, the new investment partner comes at a time when many of the industry’s heavyweights are bringing the development of technology for agents and brokerages in-house. Companies including Keller Williams, RE/MAX, Realogy and Compass are launching their own CRMs and transaction management solutions.
But despite the prevalence of that trend, Kelly doesn’t exactly see these well-funded industry giants at competitors. Rather, he sees them as partners.
“I look at us as a technology partner to help those franchises achieve the ultimate goal because our goals are the same,” Kelly said. “We’re trying to simplify that transaction experience.”
Lone Wolf isn’t necessarily trying to be the end-to-end platform for those companies, rather individual pieces of technology that can be integrated into their own platforms.
Lone Wolf, however, can be the end-to-end platform for brokerages that aren’t focusing on developing their own technology.
Kelly also praised the long-term vision of his company’s new investor, telling Inman that Stone Point Capital is aligned with Lone Wolf’s vision of being an industry partner, rather than a disruptor.
“The great thing for us as an organization, talking with Stone Point and learning about their philosophy is, they look to us in terms of, what should that strategy be?” Kelly said. “How can we continue to grow that business and where should we place our investment dollars, whether it’s in people or technology.”
For the past four years, the DOJ has been conducting an inquiry into whether Smith, Vista Equity Partners’ CEO, failed to pay U.S. taxes on roughly $200 million in assets that passed through offshore vehicles, according to the Wall Street Journal.
As part of the settlement, Smith will admit liability for additional taxes owed and not properly filing foreign bank account reports, but he won’t be prosecuted, the paper said. He will also pay a penalty of $85 million, back taxes of about $30 million and about $25 million of interest. The WSJ said the deal is among the largest known agreements by a U.S. taxpayer to resolve issues involving undeclared offshore accounts.
At the time Vista Equity Partners invested in Lone Wolf in 2015, the Ontario-based company served 250,000 real estate professionals in the U.S. and Canada. It now says its customer base is greater than 1.4 million.
Stone Point Capital’s previous real estate industry investments include Auction.com.
“We are enthusiastic about the long-term opportunities within the real estate services and technology industry,” Stone Point CEO Chuck Davis, said in a statement. “This industry is undergoing rapid digital transformation, and we are pleased to partner with [Kelly] and his colleagues, who together have built a remarkable company and have demonstrated the vision to continue to grow and better serve their clients.”
