Breaking news: Hg acquires Litera Microsystems

Hg has acquired Litera Microsystems from K1 Investment Management after a three-year period in which Litera is said to have tripled its revenue.

K1 notably built the company through merger in a bid to create an end-to-end document solution for lawyers: in 2016 K1 acquired Microsystems and Xref followed in 2017 by the acquisition and merger of Litera and the Sackett Group. It invested a total of $100m on the four acquisitions in a deal finalised on 11 August 2017.

While the terms of the transaction are undisclosed, Investegate, which writes about listed companies, reports that as just part of the acquisition, HgCapital Trust will invest approximately £32.1 million in Litera, with the remaining investment coming from other part of the Hg business and other institutional clients of Hg investing alongside the company through the Hg Genesis 8 Fund.

Recent wins for Litera include Magic Circle firm Clifford Chance, which in 2018 selected the Litera Desktop, comprised of its full suite of products for drafting, proofreading, comparing, repairing, cleaning and securing documents, collectively supporting the document drafting lifecycle.

In October 2018, Litera announced that fellow Magic Circle firm Allen & Overy, which has 2,800 lawyers in 40 offices across 31 countries, had chosen to implement Change-Pro Premier and Metadact for its firm-wide document comparison and metadata management. A release from K1 out today (7 May) says: “With K1’s partnership, Litera tripled its revenue to become one of the world’s leading providers of end-to-end document management software.” Part of that growth is through the combination of revenue as opposed to organic growth.

Last year Litera, which has 1,300 clients, announced that it will extend its integration programme to content providers, signing an agreement with Kira Systems that will see Kira become available through Litera’s Microsoft Word toolbar.

Hg, which has focused on the legal sector for 15 years, has six legal and compliance investment in its current portfolio, including global enterprise legal management provider Mitratech and German legaltech company STP, which provides insolvency and legal practice software.

Based in London, Munich and New York, Hg is a specialist private equity investor focused on software and service businesses. It has around 170 employees and £10bn under management.

Speaking at our #GlenLegal19 CIO conference in Gleneagles Hotel in March, Hector Guinness, a principal at Hg Capital told a packed room: “In the legal industry, you are both competitors and peers. You respect each other. There is a sense of community. That means if a supplier does a good job, people will get to hear about it. If they do a bad job, they get to hear about that too. But as an investor, that’s an exciting opportunity.”

Guinness added that the opportunity to improve productivity in law firms is ‘almost limitless’ commenting: “There is this huge wave of legal technology to drive that productivity. And it is great to see law firms increasingly embracing that. As investors, that makes legal tech a great place to be.”