Zillow Group is selling Market Leader to the Perseus Division of Constellation Software Inc., a Toronto-based software and services firm, for $23 million in cash. The firms expect the deal to close early in the fourth quarter.
Though publicly coy about its plans around Market Leader for months, the company has been trying to sell the asset for six months, Inman previously reported. Zillow absorbed the real estate CRM and marketing provider in its February acquisition of Trulia.
The sale values Market Leader at 94 percent less than the $355 million in stock and cash Trulia paid for the company two years ago. Zillow and Trulia mined some of that value — such as the Realestate.com domain name, which Market Leader paid $8.25 million for in 2011 — but the valuation difference remains stark.
“Since we closed our acquisition of Trulia, we’ve been assessing how Market Leader would fit with our broader business strategy, and we felt that Market Leader’s customers and employees would be best served by a company with deep roots in delivering enterprise software, and by a company for whom Market Leader would be a core offering,” said Zillow Group Chief Financial Officer Kathleen Philips in a statement.
“We chose Constellation as the buyer because they are excited about investing in Market Leader products, supporting Market Leader customers and continuing to work with Market Leader employees.”
Market Leader’s associated lead generation businesses, Market Leader Leads Direct and HouseValues.com, are included in the deal. The Bellingham, Washington-based firm has 102 employees.
Zillow circulated a “memo” in March in an attempt to unload Market Leader, but unloading the asset has been more difficult than Zillow may have expected.
Recently, Zillow acquired dotloop, another agent software company that provides transaction services to agents. Market Leader is primarily a lead generation customer relationship management tool for agents.
Many of Market Leader’s biggest customers have been scrambling to find alternatives because of the uncertainty surrounding Market Leader.
When Trulia bought Market Leader in May 2013, the company said the acquisition would bring total premium subscribers to 46,000 — more than any other real estate website — and eventually result in a “combined platform that creates value for the entire real estate market, from consumers to brokerages, agents and franchisors.”
Today, a few things have changed. Better software is available, and integration was difficult for Trulia. If Market Leader had been successfully integrated, Zillow would likely not be selling it.
This was expected for some time, I think. But $23 million? Trulia paid $355 million for ML… Maybe some… http://t.co/bKZ1xrsTId
— Robert Hahn (@robhahn) September 3, 2015
— PAA Research (@ActAccordingly) September 3, 2015