According to Bloomberg, LegalZoom.com’s value is now US$2 billion based on its current US$500 million capital raising; part of the raised funds will be used to pay out some investors and LegalZoom is growing at 20% per annum with profit margins above 20%.
The company itself has announced that in the UK it has “grown subscriptions to more than 50% of U.S. revenue.”
In July 2018, LegalZoom made a $1.8 million investment in Australia-based LawPath.
LegalZoom Announces $500 Million Secondary Investment Led by Francisco Partners and GPI Capital, with Participation from Franklin Templeton and Neuberger Berman
Addition of New Growth Equity Investors as LegalZoom Accelerates Growth
LegalZoom, the leading provider of legal solutions for small businesses and families, announced a $500 million secondary investment led by Francisco Partners and GPI Capital, with participation from one or more Franklin Templeton Investments funds and funds managed by Neuberger Berman Investment Advisers.
“Delivering valuable solutions that naturally evolve into deeper relationships with customers has resulted in a rare combination of healthy profitability and accelerating revenue growth,” commented LegalZoom CEO John Suh. “We’re excited to partner with an impressive set of new growth equity investors that will support our efforts to democratize law.”
LegalZoom continues to build on its market leadership position by launching new services to small businesses and families while expanding into new channels and territories. The company enjoys more than 10 times greater brand awareness than online or offline competitors. In recent years, LegalZoom has successfully expanded into the United Kingdom and grown subscriptions to more than 50% of U.S. revenue.
“We are delighted to partner with the team at LegalZoom, which has combined preeminence of brand and leadership in online legal services with an attractive business model,” says Neil Tolaney, head of consumer internet investing at Francisco Partners. “We share LegalZoom’s commitment and mission-driven approach to providing business owners and families with a robust product offering, leveraging the power of a passionate team of ‘Zoomers’ and an extensive network of attorneys.”
Dipanjan “DJ” Deb, Co-Founder and CEO of Francisco Partners, continued, “This investment builds upon our rising consumer internet franchise. We look forward to supporting the company to accomplish its long-term strategic vision as the category leader.”
“LegalZoom delivers a truly compelling value proposition and is well-recognized as a market pioneer. We are excited to invest at another inflection point as the team extends the platform with an innovative product roadmap, drives further penetration of a large addressable market and continues to deliver first quartile metrics,” said Khai Ha, Partner at GPI Capital.
“LegalZoom’s business model has gone through an impressive evolution since we first met them five years ago,” says Dan Searle, Vice President and Research Analyst at Franklin Templeton Investments. “They are a clear category leader with a mission to make legal services more affordable and accessible for small businesses and families. We think this is an exciting time to be investing in the company as both the business and pace of innovation are accelerating, with a substantial opportunity still ahead that should produce long term value creation for our Franklin Templeton shareholders.”
“As LegalZoom continues to deliver on its enormous market opportunity, we look forward to providing the LegalZoom team with experienced public market perspectives to help further drive long-term shareholder value creation,” added Neuberger Berman Portfolio Manager, Charles Kantor.
Following completion of the transaction, existing investors will retain meaningful stakes in the company. Global private equity firm Permira will remain the largest shareholder, Bryant Stibel will retain its entire ownership stake and Kleiner Perkins and Institutional Venture Partners (IVP) will retain the majority of their ownership stakes in LegalZoom. IVP and Kleiner Perkins invested in LegalZoom in 2011; the Permira funds and Bryant Stibel invested in 2014.
“Since the Permira funds’ 2014 investment, LegalZoom has doubled revenue and enhanced its growth rate with exceptional profitability,” said Dipan Patel, a Permira Partner. “We invested four years ago based on a compelling vision, only to see it come to life through great execution and continuous innovation. We’d like to thank all Zoomers for an incredible 4 years; the opportunity ahead is immense and we’re excited to continue the journey as a long-term holder.”
As part of their firms’ investment in LegalZoom, Dipanjan “DJ” Deb and Neil Tolaney from Francisco Partners and Khai Ha from GPI Capital will join the company’s board of directors. Jeff Stibel of Bryant Stibel, who has served on the LegalZoom Board of Directors since 2015, will assume the role of Chairman.
J.P. Morgan served as sole placement agent on the transaction and Cooley LLP acted as legal advisor to LegalZoom and its board of directors. Deutsche Bank acted as financial advisor and Paul Hastings LLP acted as legal advisor to Francisco Partners. The transaction is subject to customary regulatory approvals and is expected to close during the third calendar quarter of 2018. The terms of the transaction were not disclosed.
About Francisco Partners
Francisco Partners is a leading global private equity firm that specializes in investments in technology and technology-enabled services businesses. Since its launch over 18 years ago, Francisco Partners has raised over $14 billion in capital and invested in more than 200 technology companies, making it one of the most active and longstanding investors in the technology industry. The firm invests in opportunities where its deep sectoral knowledge and operational expertise can help companies realize their full potential. For more information on Francisco Partners, please visit www.franciscopartners.com.
About GPI Capital
GPI Capital is an investment firm dedicated to non-controlling, growth-oriented investments with offices in New York and London. GPI leads equity and equity-like structured financings, typically investing US$100 to $300 million for stakes of up to 20% in privately-held late stage businesses or through negotiated investments in public companies. GPI’s investment team has extensive experience in North America, Western Europe, and select high growth economies focusing on the consumer, technology and industrial sectors.
About Franklin Templeton Investments
Franklin Resources, Inc. [NYSE:BEN] is a global investment management organization operating as Franklin Templeton Investments. Franklin Templeton Investments provides global and domestic investment management to retail, institutional and sovereign wealth clients in over 170 countries. Through specialized teams, the company has expertise across all asset classes—including equity, fixed income, alternative and custom solutions. The company’s more than 650 investment professionals are supported by its integrated, worldwide team of risk management professionals and global trading desk network. With offices in over 30 countries, the California-based company has 70 years of investment experience and over $724 billion in assets under management as of June 30, 2018.
About Neuberger Berman
Neuberger Berman, founded in 1939, is a private, independent, employee-owned investment manager. The firm manages a range of strategies—including equity, fixed income, quantitative and multi-asset class, private equity and hedge funds—on behalf of institutions, advisors and individual investors globally. With offices in 20 countries, Neuberger Berman’s team is more than 2,000 professionals. For four consecutive years, the company has been named first or second in Pensions & Investments Best Places to Work in Money Management survey (among those with 1,000 employees or more). Tenured, stable and long-term in focus, the firm fosters an investment culture of fundamental research and independent thinking. It manages $304 billion in client assets as of June 30, 2018. For more information, please visit our website at www.nb.com.
Permira is a global investment firm. Founded in 1985, the firm advises funds with a total committed capital of approximately US$38.5bn (€33bn) and makes long-term investments in companies with the objective of transforming their performance and driving sustainable growth. The Permira funds have made over 250 private equity investments in five key sectors: Technology, Consumer, Financial Services, Industrials, and Healthcare. The Permira funds have a long track record of successfully investing in technology companies around the world and have deployed over US$10bn (€8.8bn) in the sector since 1997. In addition to LegalZoom, portfolio companies have included Magento, WeddingWire, Allegro, Ancestry.com, Genesys, Informatica, NDS, TeamViewer and Teraco. Permira employs over 250 people in 14 offices across Europe, North America and Asia.
LegalZoom is a trusted platform of people and technology that gives the world access to consistently high quality legal solutions. As the nation’s leading provider, LegalZoom empowers millions of people to protect what matters most to them. Whether it’s helping small business owners or families, LegalZoom delivers high touch, high service legal solutions that help customers be more informed and secure in their legal decisions. LegalZoom services customers in the US and the UK and is now over 1,200 employees strong.