As DocuSign reportedly explores a sale to private equity, it’s acquiring a company itself.

On Monday, DocuSign (which now prefers to go by Docusign, with a lowercase “S,” a PR rep from the company tells me) announced that it’s buying Lexion, a contract workflow automation startup, for $165 million. The purchase comes as DocuSign makes increasing investments in the contract management space, most recently launching DocuSign IAM, a service aimed at connecting different components of the corporate agreement creation and negotiation process.

Lexion was incubated at the Allen Institute for Artificial Intelligence (AI2), the AI-focused research arm of the nonprofit Allen Institute. Gaurav Oberoi founded the company together with former Microsoft research software development engineering lead Emad Elwany and engineering veteran James Baird; Oberoi previously co-founded survey platform Precision Polling, which SurveyMonkey acquired shortly after it launched.

Lexion began as a “smart” repository for contracts, letting legal teams ask natural language questions about documents. But it slowly expanded with tools to address various use cases and challenges in document creation for teams across not only legal departments, but sales, IT, HR and finance.

Lexion had raised $35.2 million in venture capital prior to the acquisition from investors including Khosla Ventures, Madrona and Point72 Ventures.

According to DocuSign CEO Allan Thygesen, Lexion’s technology will enable DocuSign customers to gain a “more granular” understanding of their contract structures and data, as well as better identify insights and potential risks. DocuSign will tap Lexion’s AI models for contract creation and negotiations, while Lexion will build integrations with DocuSign’s products and solutions.

The purchase comes at a pivotal moment for DocuSign, valued at about $12.5 billion, which is said to be in the process of selling itself to a private equity firm. Perhaps in a bid to make its books more attractive to suitors, DocuSign in February announced plans to lay off ~6% of its workforce — some 400 jobs.

Reuters reported in January that Bain and Hellman & Friedman are among the final bidders in an auction for DocuSign, which could be one of the biggest leveraged buyouts in 2024.

DocuSign’s other acquisitions include SpringCM (in July 2018 for $220 million), a cloud platform for sales contract management, and Seal Software (in February 2020 for $188 million), a company specializing in AI-driven contract analytics.