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  • LegalZoom Announces $500 Million Secondary Investment

    July 31, 2018

    PRESS RELEASE – 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.

    Click here for the full press release. Additional coverage: Bloomberg, PEHub.


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