Carrick Capital acquires majority stake in Factor in “one of the biggest net new investments” in the legal market – although the value is not disclosed
Axiom spin-off and managed legal services provider Factor today (18 August) announces a significant new investment to be provided by Carrick Capital Partners (Carrick), an existing investor focussed on software and software-enabled businesses with over $1B in assets under management, which will become the majority shareholder of Factor. The deal, expected to close by October 2020, is said to represent one of the biggest net new investments in the global legal solutions market, although the value of the deal has not been disclosed.
Speaking to Legal IT Insider, Axiom’s head of strategy Chris DeConti said: “Carrick were a significant investor but not our largest investor and with this investment they are multiplying that stake to become the majority shareholder. We’re not discussing the amount but it’s a material stake and a material investment that we believe is one of the largest net new investments in the space.”
The investment will involve issuing new shares as well as buying out existing shareholders, although Factor is also declining to say whose shares are being acquired, with DeConti observing: “It’s not closed yet and it’s a private transaction.”
Company officials said the infusion of capital will allow Factor to grow horizontally. It plans to immediately expand and accelerate its development of innovative, large-scale, customized, legal solutions for clients in the enterprise, life sciences and financial services sectors.
DeConti said: “We do think of legal as central to what we do but more specifically all our work is contracting and that usually fits in a space that covers legal but may also touch on business and compliance.”
In a sign that we can expect further productization of its services, Factor says it will also draw upon Carrick’s proven track record of growing technology-enabled services businesses. However, DeConti added: “We take a productised approach to what we do but that doesn’t mean a narrow technological approach. If you take a life sciences procurement contracting product, for example, that includes technology and different resourcing models, it’s larger than just a technology solution.”
Carrick approached Factor with the buyout proposal.
“Our move to become majority shareholder of Factor was a strategic decision based on the company’s unique track record of delivering differentiated solutions to the legal market,” said Jim Madden, co-founder of Carrick and founder of business process outsourcing (BPO) provider Exult. “With their vision, deep domain expertise, and gold-plated client list, the Factor team combines sophisticated expertise, technology adoption and business process optimization with a nuanced understanding of how lawyers and business leaders think. Their singular focus on bringing legal innovation to more complex work is unique in the market. With lots of players focused on the commoditized bottom, Factor has a huge growth opportunity in the much larger sphere of more complex work. Rather than innovating around the periphery, they are helping GCs and businesses where they need it most.”
The announcement is the latest milestone in a journey that began more than a decade ago when Factor, then part of Axiom, began offering corporations a combination of efficient, technology-enabled legal managed services and expert legal resourcing. In a strategic move, the company spun off from Axiom last year and rebranded to Factor.
“Carrick has already demonstrated it is a committed and trusted partner of ours,” said Varun Mehta, CEO of Factor. “The new chapter in our partnership with Carrick positions us to bring new client solutions to the market at unprecedented scale, and fuel even faster growth than we achieved in our first six months as a rebranded company. Factor has the geographic reach, domain expertise and financial backing to provide our clients with the industry’s most innovative solutions. We fully expect to leverage this investment into larger opportunities, and more focus on our customers and our mission in transforming the way legal solutions are delivered for General Counsels and the companies they serve.”