ReAlpha Tech Corp., Central Ohio's newest public company, has signed a letter of intent to acquire another Dublin-based business.
The real estate technology startup on Monday announced its intention to purchase United Software Group, an IT firm ReAlpha says will help advance the company's strategy "to propel the digitization of the real estate industry through the development and deployment of innovative AI solutions."
“Our planned acquisition and integration of USG is a strategic leap forward for ReAlpha, serving as a catalyst to further enhance our engineering and AI capabilities, while amplifying our talent pool in this competitive AI-industry landscape,” ReAlpha co-founder and CEO Giri Devanur said in a press release.
Under the terms of the LOI, ReAlpha will acquire USG through a combination of common stock and cash, some of which are subject to performance-based earn-out measures. The acquisition is anticipated to close in the first quarter of 2024, pending negotiation of the definitive agreement to be entered into, foreign regulatory approval, other customary closing conditions and potential stockholder approval to the extent required by the Nasdaq listing rules.
USG will become a wholly-owned subsidiary of ReAlpha when the deal closes. USG Founder Anju Vallabhaneni will continue to serve as CEO of the company, and its more than 2,000 full-time and contract workers will be integrated into ReAlpha's workforce.
"By joining forces with ReAlpha, we believe we are well-positioned to innovate the real estate industry in a way that resonates on a global scale," Vallabhaneni said in the release.
Founded in 2002, USG is an IT consulting firm that specializes in workforce management, data engineering, back-end architecture and product development. It has evolved from a small startup to a global company that is on pace to generate more than $80 million in gross revenue this year.
ReAlpha says the acquisition will provide "significant synergetic contributions to our existing portfolio of technologies, in addition to providing immediate contribution to ReAlpha’s revenues."
“We believe this synergistic, revenue-producing transaction further propels us towards a future where innovation is not just a goal, but a pivotal new standard in our industry," Devanur said in the release.
The USG deal caps a busy year for ReAlpha. This spring, the company acquired Columbus-based Rhove in March. The tech firm, which describes itself as the "Robinhood of real estate," was among Columbus Inno's Startups to Watch in 2022.
And ReAlpha, whose stock symbol is AIRE, began trading on the Nasdaq in October. The company used a novel process that skipped the IPO, so only a fraction of its shares were available for sale at the time it began trading.
ReAlpha raised $9.1 million in a so-called "mini-IPO" under Regulation A of the 2012 Jobs Act, one of several ways it has raised capital. That crowdfunding offering was investigated by the Ohio Division of Securities, which closed its investigation without sanctions in the summer, clearing a looming issue for the listing.
Also a previous Columbus Inno Startup to Watch, ReAlpha seeks to democratize real estate investing by purchasing short-term rentals and offering access to those assets to everyday investors. It also plans to make some of its technologies available for commercial use on a licensing fee basis, pay-per-use basis or other fee arrangements.
