Tennessee-based private equity firm Greater Sum Ventures (GSV)—partnering with Insight Venture Partners—has been steadily rolling up large technology companies in the vacation rental industry, acquiring majority stakes in Streamline Vacation Rental Software, Bizcor, Bluetent (which purchased Visual Data Systems), Rental Guardian, Virtual Resort Manager (VRM), and most recently, LiveRez.
And the number is growing as more companies are currently in the due diligence process.
Reportedly, purchase agreements for these companies include a mix of cash, shares for founders in the overall rollup, and earnout consideration based on performance. Each company’s deal is different, with some founders receiving a more optimal mix of compensation levers than others. The structure of the purchase allows each company to claim that GSV has “invested” in the company rather than labeling the commercial arrangement as an acquisition, and tight non-disclosure agreements prevent founders from discussing the purchase arrangements.
What are GSV’s future plans with the rollup?
GSV has repeatedly declined to comment on its intentions.
However, according to sources, GSV’s plan is to sell in short order. Several insiders say that GSV’s plans are to roll up vacation rental technology companies, find synergistic cost savings, negotiate and optimize existing contracts, and package the technology group for sale in as little as twelve months.
VRM Intel has received several reports from technology companies and service providers who opened up their books to GSV in hopes for an acquisition that did not come, giving GSV unprecedented insight into key financials and revealing a unique look into enterprise-level technology offerings and profitability by sector.
Vacation rental industry concerns
Over one hundred vacation rental managers have reached out to VRM Intel to find out more about GSV’s activity.
The leading cause for concern revolves around innovation and implementation.
With the end of support for legacy systems such as PropertyPlus, Entech and First Resort, which HomeAway Software shut down last month, many enterprise-level vacation rental managers migrated to technology solutions now under the GSV umbrella, purchasing software systems they believed were moving forward and innovating. Instead, they have found themselves in an implementation backlog with shrinking hopes of seeing the improvements and innovations they were promised.
And with the rising distribution cost of using OTAs, property managers are watching technology and marketing costs increase while innovation and tech support decrease.
As PMs learn more about the performance-based agreements between GSV and the companies it acquired, users are voicing concerns that overall technology innovation in the vacation rental industry will stall.
While communications from the companies purchased by GSV have been consistent, stating that nothing will change for users, a number of employees of the acquired companies—especially in sales roles—have seen compensation packages altered and have been actively putting out feelers across the industry for new job opportunities.
The truth is that we do not yet know
While GSV has declined to comment on its acquisition activities and plans for the future, the company has been public in casting a wide net in sourcing acquisitions. Over 15 vacation rental technology companies and service providers reported to VRM Intel that GSV has reached out to their teams with acquisition interests.
They even reached out with a blanket letter to VRM Intel:
Companies report that, in preliminary discussions, GSV floats an early purchase amount, and then engages in an extensive due diligence process. However, several companies who have engaged in the process report that GSV ultimately “passed” on purchasing their companies.
In the absence of GSV sharing its objectives, the vacation rental industry is forced to speculate about its intentions. As a private equity company, it is safe to assume the goal is to sell. But with the market-leading position of the software companies it has purchased, the industry is left to wonder what will become of innovation in the sector.
Among professionally managed vacation rental professionals in the US, the choices for software and web solutions are limited. As more tech companies join the GSV roll up, managers will be watching closely to see how GSV maintains and supports the companies it has purchased.
Seems to me LiveRez’s Tracy Lotz was pushed out of LiveRez very quickly, the problem with bedding down with the devil, you have no control and they can turf you anytime. I had a chat with Tracy years ago and he stated then that he formed the company to be the opposite of the other acquired companies out there…problem is, to continually evolve and improve itself, a company needs money and many take on “investors” that do not have the PM’s best interest at heart or the software companies long term interest at heart, the investors want a quick turnaround of their money. Sad…
Amy, Please do not sell out! we love you and the very fair information and reporting you provide our industry.
Carlos — you will make over 60M dollars when GSV sells Vacation Brands. Seems to me like a short term incentive…I am also sure that most of those systems will go away as they consolidate cost. Take a look at Glassdoor so you can really understand GSV and their belief system…
Interesting moves throughout the industry. So many unique offerings – and one firm will own the databases to all of our properties. Sounds like when investors buy up beach front land, until they own enough of it to develop a big new hotel in a growing hot tourist area. Hopefully that isn’t what’s happening here. But time will tell.
WAIT, I THOUGHT LOTZ FROM LIVEREZ SAID OVER AND OVER I WILL NEVER TAKE VC MONEY OR I WILL BURN THIS PLACE TO THE GROUND BEFORE I MOVE FROM BOISE, IDAHO. IN ADDITION, FROM MY SOURCE HE HAS TAKEN MONEY FROM ANGEL INVESTORS.SEMANTICS. HA NO SURPRISE. REMINDS ME OF THAT JIM CAREY MOVIE, LIAR LIAR.
Speaking of LiveRez, they just doubled their rates “In order to keep up our pace of continually enhancing our software and providing world-class support.” What happened to all that money they got from GSV? Wasn’t THAT for this purpose? Did the owner just take that money and scurry off to his $2 million house in Arizona? Something doesn’t seem right.
Spot on Sammy. I wonder how many PM’S will leave LiveRez?…They are BIG JOKE and full of….
On September 24, 2019, they locked many LiveRez users out of our systems and forced us to agree to a 9 paged Terms and Conditions document before we could continue operating. The document recommended us to review it with an attorney, but did not allow ANY time to even read or review, we were locked out of our system . . . . what kind of company behaves this way? And this was after announcing a 100% increase in our rates, with a 30 day notice.
They threw us to the Sharks.
At Streamline, we are actually pouring more money and resources into improving our technology than ever before. We have never had the opportunity to do this at such a large scale.
Our engineering department alone has nearly tripled this year with expansions in QA, system development, product owners, scrum masters and we hired a new VP Engineering who has had a tremendous impact, in just 10 months, on our software development process, quality and reliability.
We have built an accounting department to keep up with the ever changing requirements throughout cities/states across the US.
We continue to enhance our product and will soon be launching the ability for property managers to control their own resource allocation. This will allow larger companies, who have the need to scale quickly, to instantly maximize speed and keep up with their growing demands.
We are even rolling out a pricing suggestion tool to help our property managers understand how they are doing versus their competition.
I am a firm believer in innovation and it is what has made us successful. Streamline will continue paving the way for technology in the vacation rental space.
There are much more technological surprises coming……
We are here for the long haul!
Synergy. I hope everyone working for these companies can find new jobs before they get synergized.