The announcement on 8 October that Aderant was to be acquired by the recently rebranded Roper Technologies came after ‘ongoing discussions’ that became serious in the early summer of 2015 and then progressed quickly from there.
Aderant, which has had a series of record quarters and counts 77 of the top 100 global law firms as its clients, has been private equity-owned for a decade, most recently by Madison Dearborn Partners, which bought a majority stake from Vista Equity Partners in 2012 and last year bought the company outright.
Speaking to Legal IT Insider, Aderant’s chief executive Chris Giglio said: “There has always been in-bound interest. There is significant interest in legal technology for a number of investors and we tend to be at the top of the list because we’re really strong financially and we have a very ambitious plan going forward.”
It was the in the summer time that Aderant’s management team decided to explore that in-bound interest, in no small part governed by the opportunity for Madison to liquidate its asset.
Roper’s offer of $695m (including $20m of tax benefits) was attractive for a number of reasons, including the fact that it would give Aderant a permanent home and access to significantly more capital to take its ambitions forward.
Called Roper Industries until April 2015, the S&P 500 company has previously been known for its engineering products and solutions but is transitioning and Aderant is part of that future direction.
Were Aderant’s management team concerned that Roper’s existing stable of businesses were incompatible? No, says Giglio. “In an acquisition the bit a strategic business worries about is dilution – catering to others’ needs and the distraction of cross-selling. Our business will continue to focus on legal and professional services clients.”
It will certainly mean huge stability for a company that has changed hands now for the fourth time since it changed its name from Custom Management Systems to Aderant in 2004, when it was acquired by Francisco Partners.
Being private equity owned has undoubtedly had some up sides. Aderant has benefited from being tightly run and the expectation among private equity players that the cabinet will be left ‘well-stocked.’
Giglio says: “The private equity model requires them to create value and as a result of being private equity-owned we have been allowed to take a long view of investment.”
However he adds: “The down side is the uncertainty as you go through transactions.”
Looking forward, Roper is a profitable, $3.2bn business that in the first quarter ended 31 March 2015 saw its free cash flow rise by 24% to $250m – and it is looking to invest in Aderant’s growth plans.
At the time of the acquisition Giglio said the acquisition would help Aderant to undertake “larger strategic initiatives and even more visionary product development.” Immediate plans include bringing in extra resource to accelerate its existing road map for its business intelligence, case management and billing platforms.
However, the company is also looking at acquisitions that make sense to Aderant and its client base and is already involved in a number of discussions.
Aderant as yet has no document management, knowledge management or talent management capability and without being drawn on any of the detail Giglio says: “Those are areas that would make sense.”
But he adds: “There are others.”