Brivo to go public

Cloud-based access control pioneer Brivo on Wednesday announced that it has entered into an agreement to merge with Crown PropTech Acquisitions, a special purpose acquisition company (SPAC), and subsequently become a publicly traded company.

According to a statement, the transaction values the company at an enterprise value of $808 million. Upon the deal’s closing, the combined company will operate as Brivo, and its Class A common stock is expected to be listed under the ticker symbol “BRVS.”

Once the merger is complete, the combined company will receive $75 million in a convertible note led by Golub Capital Credit Opportunities. Existing Brivo shareholders will roll over 100 percent of their equity, retaining 69 percent ownership in the pro forma company. Assuming no redemptions, Crown shareholders will own approximately 31 percent of the combined company.

The boards of directors of Brivo and Crown have unanimously approved the merger. The transaction still requires the approval of Crown stockholders, and is subject to other regulatory approvals. The transaction is expected to close in the first half of 2022. 

Brivo’s management team – including founder and CEO Steve Van Till, COO John Szczygiel, CFO Mike Voslow and CTO Jeff Nielsen – will continue to operate and manage the combined company following the transaction. Dean Drako will continue to serve Brivo’s chairman of the board.

“The goal of our SPAC was to target and merge with a business that provides technological solutions that make the built environment more accessible, connected, dynamic, efficient, experiential and sustainable – which is precisely why we are excited to announce the proposed business combination of Crown PropTech Acquisitions and Brivo, the global leader in cloud-based building access management for commercial real estate across asset types including industrial and office, large distributed enterprises and multifamily residential,” Crown PropTech Acquisitions Chairman and CEO Richard Chera said in a call with investors on Wednesday announcing the deal.  

Cloud Adoption Surges

Brivo Chairman Dean Drako, the founder of cloud-based VMS provider Eagle Eye Networks who acquired Brivo in 2015 for $50 million, said that he was initially drawn to the company due to its “forward-thinking cloud architecture” and has seen adoption of their technology grow by leaps and bounds in the years since.    

“In 2015, we had six million credentialed users and 100,000 access points – today, we have over 23 million credentialed users and over 333,000 access points,” said Drako. “I am enthusiastic about this growth, as well as what we have delivered in terms of our products and technology, our platform, our team, our partner networks and our scale.”

Financial disclosures filed with the U.S. Securities and Exchange Commission (SEC) in conjunction with the deal’s announcement also show the company has enjoyed healthy financial growth over the past several years, increasing from $42.5 million in revenues and $27.2 million in gross profit in 2018 to $57.4 million in total revenues and $34.2 million in gross profit in 2020. However, those figures pale in comparison to the company’s future growth projections, which estimate that Brivo will reach $416.6 million in total revenues in 2025, with gross profit topping $267 million.

Future Growth Drivers

Brivo CEO Steve Van Till, who founded the company in 2002, told investors during the aforementioned call that there are four trends driving accelerated growth for the company’s SaaS offerings: increasing adoption of PropTech, a growing preference for cloud-based solutions, an uptick in channel partner cloud favorability, and the new hybrid work environment.  

“First, the PropTech boom has accentuated the value of buildings having better connected digital solutions for access management, tenant experience and sustainability. The second trend, there is now a clear customer preference for cloud-based building services that work as virtually all other enterprise applications do already. Cloud is now 10-15% of the access control market and is expected to grow 5x over the next five years,” Van Till explained. “The third trend, channel partner cloud favorability has swung dramatically from 20% to 75% over the last five years. And finally, hybrid work patterns with employees constantly changing spaces – and what is now the new normal in health and safety – call for a higher density of robust smart space solutions.”

Taken together, Van Till said these trends combine to create to create a $70 billion total addressable market – $28 billion in products and $42 billion in SaaS.

“Notably, the majority of the high margin SaaS revenue, what we estimate to be $30 billion of this opportunity, is concentrated in Brivo’s primary markets of enterprise and commercial buildings, where we are singularly positioned to capture it,” added Van Till.

The merger is expected to provide Brivo with up to $304 million of capital to continue growing the company. Van Till said they plan to use some of the proceeds to expand their sales and marketing teams, as well as on customer acquisition, SaaS service expansion and product development.

“Over the last 20-plus years, we have built a strong and trusted brand, pushed the industry forward with innovative products and services and developed a robust business model and foundational platform,” Van Till said. “The proposed merger with Crown PropTech Acquisitions allows our management team to activate our proven strategy and capitalize on the remarkable opportunity in smart spaces brought about by favorable market fundamentals.”