How AI Is Impacting Valuation in HOA/Condo Management: Our Preliminary View

Background

The integration of artificial intelligence into HOA/condominium management and accounting is beginning to influence the valuation and sale process of management companies in a meaningful way. As AI-driven tools gain traction, buyers are placing increasing value on companies that leverage these technologies to enhance operational efficiency and scalability. Early evidence suggests that these improvements are starting to influence purchase prices, particularly in competitive sale environments. We believe this marks a notable shift in how buyers underwrite both current performance and future growth potential.

Our View

Specifically, AI products designed for the HOA/condo management space are now capable of materially increasing productivity by automating tasks like customer service response, financial reporting, maintenance tracking, and compliance workflows. While the core value proposition of these businesses has traditionally centered on stable cash flows, recurring revenue and recession resistance, buyers are now evaluating how well-positioned a target company is to adopt or build upon these AI enhancements. In auction processes¹ of 5+ bidders, this is creating greater differentiation between companies that have implemented AI and those that have not—leading to wider bid spreads and, in some cases, premium pricing.

The impact is also being felt in limited sale processes², in which buyers may be more selective in targeting platforms that have already made meaningful investments in technology. These buyers are increasingly offering creative deal structures, such as earnouts and contingent payments³ , tied to post-close productivity or growth metrics driven by AI. While the full financial impact of AI on management company valuations is still emerging, we are observing a growing willingness among buyers to "pay up" for operational leverage created through automation—especially when the technology leads to margin expansion.

In our view, we are still in the early innings of this trend. However, as AI adoption becomes more widespread, we anticipate a bifurcation in the market: companies that embrace productivity-enhancing technology will not only operate more efficiently, but also command higher valuations in sale processes. Those that do not may find themselves facing downward pressure on price or less favorable deal structures. This dynamic is beginning to reshape the playbook for both buyers and sellers in the HOA/condo management M&A landscape.

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(1) Auction process: A structured sale process in which multiple potential buyers are invited to bid for a company, typically resulting in competitive offers and higher valuations.

(2) Limited process: A sale effort involving outreach to a small, select group of potential buyers.

(3) Earnouts/contingent payments: Deal structures in which a portion of the purchase price is paid over time based on the company's future performance.

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For more information on the HOA management industry, valuation metrics, or other questions, please contact contact@camadvisors.co or visit https://www.camadvisors.co/

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