- Walker & Dunlop, Inc. (NYSE: WD) recently announced it entered into a deal to buy GeoPhy for $85 million in cash. These are the details.
Walker & Dunlop, Inc. recently announced that it has entered into a definitive agreement to buy GeoPhy, a leading commercial real estate technology company. GeoPhy’s data analytics and development capabilities will drastically accelerate the growth of Walker & Dunlop’s lending, brokerage, and emerging businesses including Apprise, its tech-enabled appraisal business, and its small balance lending (SBL) platform. GeoPhy CEO and co-founder Teun van den Dries will continue to lead the GeoPhy team and assume leadership of the Apprise and SBL businesses while supporting continued innovation throughout Walker & Dunlop.
Under the terms of the purchase agreement, Walker & Dunlop will buy GeoPhy for $85 million in cash to be paid at closing with an additional $205 million of cash earn-out potential structured to directly align with Walker & Dunlop’s Drive to ’25 goals surrounding growth in appraisal revenues, SBL volumes and mortgage banking gains, as detailed below:
Small Balance Lending
2021 mortgage banking gains (MBGs): $29 million
MBGs target to achieve low-end of earn-out: $61 million
MBGs target to achieve maximum earn-out: $175 million
2021 origination volume: $515 million
Origination volume target to achieve low-end of earn-out: $1.75 billion
Origination volume target to achieve maximum earn-out: $5 billion
Maximum earn-out potential:$155 million
The earn-out opportunity is structured in four phases. A portion of the earn-out payment can be earned if the specified target within a phase is achieved.
The full earn-out potential requires the achievement of all phases of volume and MBGs milestones by 2025. Earn-out is measured and paid annually.
2021 revenues: $9 million
Revenues target to achieve low-end of earn-out: $30 million
Revenues target to achieve maximum earn-out: $75 million
Maximum earn-out potential: $50 million
“This acquisition is a game-changing investment for Walker & Dunlop, as it dramatically accelerates the growth of our technology capabilities in two areas of the market where we have the ability to disrupt the commercial real estate services industry. As our current JV partner in Apprise, we are well acquainted with the GeoPhy team and their capabilities. Actionable technology — that makes our bankers and brokers more insightful and capable — is what has differentiated Walker & Dunlop, and the acquisition of GeoPhy immediately enhances our capabilities.”
“GeoPhy is the largest technology investment we have made and accelerates the achievement of our Drive to ’25 strategy to use technology to grow our existing scaled lending and brokerage businesses, as well as transform the real estate services landscape by developing tech-enabled businesses that will be faster, better, and cheaper than the competition. We are thrilled to bring Teun, his visionary leadership, and fantastic team to W&D.”
— Walker & Dunlop Chairman and CEO Willy Walker
“GeoPhy has gained a reputation for its unrivaled capabilities in data science and predictive models, which provide our customers in the commercial real estate space with unmatched efficiencies and insights. We’re thrilled to bring our industry experience and insights to Walker & Dunlop to propel the growth of their lending, brokerage, and emerging businesses. As a combined company, we have the scale, resources, and expertise to truly differentiate Walker & Dunlop’s services in the marketplace. We know W&D, we know the value of their brand and platform, and we expect this acquisition to be a fantastic success.”
— GeoPhy CEO and co-founder Teun van den Dries
Disclaimer: This content is intended for informational purposes. Before making any investment, you should do your own analysis.