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The Optimum Time to Buy or Sell Law Publishing Businesses

For reasons that I barely remember with clarity, I am the owner of a pitifully small number of shares in two companies that are participants in law, tax and professional publishing. I worry, however, that I, personally but unintentionally, might be doing harm to the law publishing business.

It’s not that in any way the expression of my opinions can hurt them, nor can I do so by my abilities in clever financial wizardry, nor am I able at all to affect their managements or shareholders; it is much more subtle and subliminal than that. Quite simply, my wagers on such things invariably go wrong. I always buy high and sell low; that’s just the way it is. In order to make money and be successful, serious investors should watch where I place my small bets and do the opposite in great scale, thereby further enriching themselves. I have, over the years, become relatively stoical about this. If I’m buying or selling a property or commodity of any kind, I know that the date of my purchase will suddenly deliver a market high, while that of a sale will see markets instantly fall to record lows; it’s the same with stocks and shares. Maybe, perversely, I am in control.

The two corporations whose shares I hold, and which publish in areas of present interest are Wolters Kluwer and Informa. The former owns, inter alia, Wolters Kluwer Legal and Regulatory, operating various brands around the world, while the latter retains such sub-brands as Lloyds Law Reports, i-Law, Informa Law, Taylor & Francis and Routledge Law. Both corporations are successful, Wolters Kluwer especially in such markets as the health one and Informa is a global leader in business-to-business events and exhibitions markets. Perhaps, though, Informa’s decision to rebrand its exhibitions division as Informa Markets, adding a new division called Informa Tech, renaming others and exchanging its Agribusiness Intelligence unit for the majority of IHS Markit’s Technology, Media and Telecoms unit, suggests a re-evaluation of all its existing divisional structures, leading to a flushing out of its secreted law publishing business. For both Wolters Kluwer and Informa, I wonder why they both continue to participate in legal markets in which, clearly, they are minimally visible or simply not adequately successful.

For a long time, Wolters Kluwer’s regular financial reports have sought to use guarded language to describe the sad state of its legal and regulatory business, while progressively disposing of various parts of it around the world, a recent one being that of its 40% share of Austrian legal information services specialist, MANZ’sche Verlags- und Universitätsbuchhandlung GmbH. Legal and Regulatory is its smallest and, it would appear, least dynamic unit, notwithstanding the praise it has received for its Cheetah platform and even aside from the disaster of its recent malware attack and consequent shutdown. I imagine that there are few significant markets in the world in which Wolters Kluwer, as compared to Thomson Reuters or LexisNexis, is a number 1 or 2 competitor in legal information and if it scrapes a place at number 3, it is probably still small as compared to those above it.

As to Informa, its legal information publishing standing appears to be even worse, if not almost invisible. Some of its individual practitioner-focused titles and products have great reputations and importance. Nevertheless, it is difficult to understand what strategic value it has for a predominantly events and academic publishing business, whose legal portfolio seems to be laden to a significant extent with unproven and risky initial editions. Along with Wolters Kluwer, it would be extremely surprising to see from it any renewed vigour and the achievement of success in legal markets.

Against this, despite the changing nature in the market from an information publishing one to a technology and software solutions market, there are successes being achieved in the transition, some of them surprising and seemingly rather conventional, boosted by the arrival of many challengers on price and/or innovation, no doubt hoping to be acquired at some point. The French legislative ban on the publishing of judicial analytics may, however, add something of a setback to the application of artificial intelligence developments in relation to legal content and thereby limit publishers’ aspirations. This, in part, confirms the point that innovative technologies that work in some sectors do not necessarily do so in legal ones, which should be a warning for publishers.

Interestingly though, the market has been invigorated by recent acquisition activity, notably in the form of vLex’s purchase of the ever-impressive Justis and Key Media’s acquisition of several Thomson Reuters’ products in Canada. On the latter acquisition, noted commentator and industry expert, Gary Rodrigues, opines of the acquirers that the “entrepreneurialism, innovativeness, agility and perceptiveness that allows it to react to the needs of its niche audiences quickly and precisely”, which may be just the right approach to allow the acquired products and services to flourish in the market. Both acquirers are corporations based outside the countries of the respective acquired businesses and the inference is that they see potential for growth in legal information content and solutions internationally.

One might wonder, therefore, if businesses like vLex and Key Media, now that Thomson Reuters and RELX too, are increasingly sellers of such assets rather than purchasers and Bloomberg appears somewhat to have run out of steam in the market, are the new, bottom-up, international drivers of growth, albeit at micro-level. vLex, with its base in Spain, may well see the benefits of further expansion in European markets, French legislation notwithstanding, in countries in which it currently has and does not have assets. This would be subject, of course, to the challenge of being able to raise funds to acquire parts of such hugely disproportionate and valuable companies as Wolters Kluwer or Informa. With its experience and interest in case reports, it would be easy to understand the attraction of the, perhaps more affordable, Informa’s important law reporting services such as Lloyd’s Law Reports in its many guises, Building Law Reports, Chinese Maritime and Commercial Law Reports, Medical Law Reports and more, as well as its countless news reports. From Wolters Kluwer, a vast array of source material is available, including Insurance Law Reports – Life, Health and Accidents, Kluwer Arbitration, to name only a couple. Key Media, with its focus on news and commentary, might see benefit in owning iLaw’s many newsletters, journals and online news services, including Lloyd’s Maritime and Commercial Law Review and International Construction Law Review, which may be of interest also to Key Media. The geographical and market spread of these target information and solutions providers might be ideal for the potential acquirors’ expansion plans, though in reality, the more likely purchasers of these assets might be venture capitalists. In a market that includes legal content and resources but in relation to scholarly learning, the consolidation brought about by merging McGraw Hill and Cengage (formerly Thomson Learning) might provide an impetus for more of the same.

On the other hand, it may be fanciful to imagine that every such vendor retains its appeal to lawyers, law librarians and other users, as well as its acquisition attractiveness and measurable value, just by pondering on different ownership; after all, there are many examples of how and where providers and markets are apart. Authors too, need to know that they are writing for the publisher which will serve them best. It may well be that these and other law publishing businesses of their ilk are in irretrievable and terminal decline and that no change of banner over their front doors will successfully reverse their direction.

But then, what do I know? That is, except to suggest that, in relation to timing, all that is needed is to contact me to ascertain when I have it in mind to free up or invest a few pennies and the opposite of my plans will be the path to success.

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