AppFolio to sell legal unit for $193M
In a move that reflects a shifting landscape for the software business, Goleta-based AppFolio said Sept. 8 that it is selling its MyCase legal practices suite of services for $193 million to a group of private equity funds.
The all-cash deal concentrates AppFolio’s services in the real estate management field, where it has carved out a successful and profitable niche, while allowing it to pursue industry verticals outside the legal space. The transaction is expected to close before the end of the third quarter.
The move will dramatically strengthen AppFolio’s balance sheet, adding nearly $200 million to its current cash position of about $74 million. The company’s cash will now far exceed its debt obligations of $133 million, giving it much more flexibility to pay down debt, make acquisitions or ride through what could be a turbulent period for its real estate customer base in light of disruptions caused by the COVID-19 pandemic.
The sale will give the buyer—private equity funds advised by Apax Partners—a new set of software tools for its portfolio. Apax Partners said it would invest additional funds to improve on the MyCase suite of legal practice management and payment tools. MyCase was founded in 2010, four years after AppFolio got its start with its initial suite of software as service tools for smaller landlords looking to manage their rental properties.
MyCase is led by Kim Coalson, who will remain with MyCase under Apax management.
“I want to extend our gratitude to the MyCase team for the work they’ve done over the years building a business that puts their customers at the forefront of their decision-making and delivers exceptional products and services,” Jason Randall, Appfolio’s President and CEO, said in a company news release.
Kirkland & Ellis LLP is serving as legal counsel to AppFolio and Simpson Thacher & Bartlett LLP is serving as legal counsel to Apax. Raymond James is serving as financial advisor to Apax in connection with the transaction.