The Dubious Benefit of Merely Changing Ownership of Law Publishing Businesses

Focusing primarily on smaller acquisition targets, when professional publishing, or indeed any businesses are comparatively cheaply sold to and acquired by venture capitalists of one kind or another, it is hard to imagine that the motives, both for the vendor and the acquirer, though mostly the latter, are anything other than the crudest form of money-making. There may also be, of course, the characteristically politically reactionary and not always honourable inclinations, objectives and outcomes which might prevail in that world, to a greater extent than in others. Not that there is, necessarily and fundamentally, anything strange or surprising with all that, depending on personal views, not least because these are primary functions of capitalism, but there is no need to burden such transactions with more lofty or even hypocritically stated objectives. It is unlikely that the transactions are intended to serve customers in better ways, to protect and benefit suppliers and staff, along with their dependents, to enhance quality standards or to create the possibility of greater depth and breadth by consolidation. Indeed, the view of Hugh Logue, of Outsell, is that good times may be over for legal technology, as a component of information provision , as he reports on layoffs, writing “As fast-and-easy funding and an explosion in demand for cloud solutions come to an end, some legal tech startups are feeling the pain”. Of course, other, more positive objectives are theoretically possible, one is obliged to suggest.

It appears that Lloyds List Intelligence, now described as “A Montagu business”, including the professional law subscription titles and the i-Law platform, have transferred to Maritime Insights & Intelligence Limited, which is a holding vehicle for the 80% of the Lloyds List Intelligence brand which Informa sold. It also appears that some or all of the bound law books, nearly 150 of them, although they are accessible on www.i-law.com, have remained with Informa/Routledge/Taylor & Francis, arguably out of place within business-to-business and academic publishing structures, the latter of which itself now looks, other than for its revenues and high margins, like an afterthought in Informa; the books, one presumes, are licensed to the new entity. With law markets featuring in a “More Sectors” category, it does have the look of an unfinished story, and it will be interesting to see how heavyweight primary and secondary law content sits, perhaps as a non-core component, in the new environment. Further break up, or carve out of the legal information, or some other forms of partnership, may well be under consideration.

In different and arguably better market circumstances, such disposals and amalgamations would be trade sales, with purchasers doing intensive qualitative and quantitative research as part of their detailed due diligence processes to assess in what ways combinations would be advantageous; the now-approved acquisition, by Karnov, of Thomson Reuters and Wolters Kluwer French and Spanish law publishing assets, however, seems to be one which is in that mode. In those particular transactions, although they are significant, in price terms there have been many bigger ones. Still, they put into effect the continued efforts of Wolters Kluwer and Thomson Reuters to extricate themselves from legal information provision, particularly as the businesses sold are leading, rather than minor brands in the two countries. It is part of a bigger shift, having done the same elsewhere. Wolters Kluwer, for example, is no longer in the UK legal information market; Thomson Reuters has sold Compliance Learning to LRN Corporation, which is backed by Leeds Equity Partners. It will be interesting to discover if Karnov has the desire and ability to expand further, particularly as there might be available targets in the UK, perhaps even substantial ones, and in other jurisdictions too. Again, Hugh Logue wonders if “A new, large legal-information provider is taking shape in Europe. In time, will it be big enough to take on its former parents?”.  The recent purchases might be a good early move; the impression is that among the acquired businesses, certainly Aranzadi, in Spain, is an efficient and effective one, highly regarded by its customers.

Trade purchasers might be more likely than venture capitalists to consider portfolio enhancement, improvement of market presence and penetration, acquisition or sharing of human skills and/or technology. Key questions might focus on the methodology and quantification of adding value in order to increase scale, profitability and competitive advantage. These have been, until recently, the tactics and strategies of the major internationally successful providers, combining over many years and across jurisdictional boundaries carefully orchestrated mixtures of organic and acquisitive growth, while making such disposals as are deemed necessary to and consistent with the overall plan. In the past, the results can be seen at Thomson Reuters, RELX and one or two others. Over many years they moved, sometimes with the agility of oil tankers, though processes of continuous evolution, changing focus from market to market, but almost always building and carefully deconstructing along the way. Of course, now that has changed, in a period of traditional law publishing decline, as trade purchasers are less in the running and not willing or able to pay the best multiples for assets being disposed, putting the investing dragons and vultures into play.

Any review of the holdings and portfolios of such entities tends to indicate that they are Jacks of all trades and, arguably, true masters of none (perhaps why their trade can produce an English Prime Minister). Their localised expertise resides deep within their disconnected holdings, no doubt with a degree of generalism hovering above and some boardroom participation, but they are unlikely to be deeply embedded in markets, content, quirks, characteristic and people. Rather, their role is almost exclusively to feed in and squeeze funds, increase shareholder value, lawfully minimise tax, sometimes by burdening businesses with debt, and constantly searching for the optimum time for them to exit participation.

It would be both naïve and incorrect to suggest that, within its own terms of reference, this does not work, as the great accumulated fortunes testify, but questions can at least be asked as to what these opportunists and their efforts contribute. As often as not, for the relatively short periods during which acquired businesses sit with one fund, before being sold on to another and then another, little changes. Some executives take the financial benefit of their shares having been acquired and move on; others are removed as part of the inevitable reshuffling. Then they continue to be the same, in terms of how and what they do, largely because they have remained within their localised frameworks. Without involvement in what might have been former competitors, they cannot gain or share the benefits of consolidation, teaching and learning, having access to new suppliers, customers and additional market spend. With approximately the same resources, tools, people, suppliers, products and services, opportunities for substantial growth are limited, hence the familiar passing on until a proper home is found or they wither and die.

Unsurprisingly, we read different, often cliched pronouncements, of the kind, “partnering with Slee-Zee Capital Partners supports Hardly Professional Solutions’ continued provision of innovative customer solutions, going forward, and we are confident of a bright and prosperous future under their guidance, in together delivering our strategic objectives” and “Hardly Professional Solutions is an iconic and disruptive business, yet with an historic legacy and reputation. We are pleased to warmly welcome the business to our Slee-Zee family”. One usually does not have to wait too long until the message becomes “Hardly Professional Solutions is a great example of an awesome business of its kind. The Hardly Professional team has built an extraordinary service for its many valued customers. We are confident that it is well-positioned to boldly continue its expansion with Cru-Ked Management. Slee-Zee Capital Partners are pleased to have been a part of the company’s journey and, look forward to seeing it grow and prosper within its Cru-Ked family for many months to come”. And so, it goes on.

Sometimes, and to avoid a “what did the Romans ever do for us?” moment, it should be admitted that more positive outcomes might be capable of being achieved, particularly where there is the possibility and actuality of cross-fertilisation and among assets held by funds, in order to share technology, innovation, back-office resources, authors and editors, content and expert in-house teams and/or to open markets from one to another which, in other circumstances, might not have been possible. Equally, if sufficient funds and willingness are in place, there is the theoretical possibility of further mergers and acquisitions to build integrated and strong stand-alone businesses for the future, combining organic and acquisitive growth strategies. Evidence of this phenomenon is relatively infrequent. Nor would it be suggested that the characterised situations are at all applicable or similar at the conglomerate, transnational levels of corporate enterprise.

From what I can observe, though, adding value is not just about clear-outs of personnel and splashing out with other people’s money, but with unpleasant strings attached. It requires much more, by way of extensive relevant engagement, involvement, long-term commitment, experience and expertise, some of which cannot simply be traded for quick cash. Anyway, who would want to buy a law publishing business these days, when the likes of Twitter seems to hold such appeal?