Computer Software Group, the controllers of numerous legal software brands, has announced a merger and recapitalisation and will now trade under the IRIS umbrella.
Investment partnerships affiliated with Hellman & Friedman LLC (H&F), a global private equity group, has majority funded the £500 million merger and recapitalization of IRIS Software Group Limited (www.iris.co.uk) and Computer Software Group (www.computersoftware.com), two of the
The enlarged business has combined pro forma revenues of over £100 million and will trade under the “IRIS Software Group” brand umbrella. Martin Leuw, Chief Executive of IRIS will become Group Chief Executive of the enlarged Group. He will be joined on the Board by Neal Roberts, IRIS CFO who will become Group CFO and Vin Murria, the CS Group Chief Executive (who will become Chief M&A Officer).
The Directors of the TFB Group, apparently scenting an opportunity, have issued a statement which makes interesting reading and part of which is reproduced below:
The Directors of TFB Group note with interest the announcement by Hellman & Friedman LLC today that they have taken over CSG, who became the owners of a number of our competitors over the last 12 months.
Simon Hill, TFB's Managing Director comments:
'When we rejected approaches from the CSG Group in March 2006 we did so at the time as we remained unconvinced of their long term commitment to, and strategy for, the legal software market in the UK. The most recent announcement, coming as it does just some six days after the acquisition of Mountain Software, reinforces that view.
TFB Group has always taken the view that the legal profession supports the approach of independent specialist legal IT suppliers. TFB continues to be profitable and we anticipate that this year will be our best yet with operating profits edging towards £1m.
It is interesting to note that recent business press articles and Government statements have already started to raise concerns at the levels of debt now being taken on, via multinational private equity companies, at multiples not seen the since dot.com era and the potential issues for customers and employees.'
Laurence Eastham comments:
This announcement, coming as it does less than a week after the acquisition of Mountain Software, shakes up the market to the point where it might well become very frothy. CSG has acquired AIM, Laserform, Videss and Mountain in under 14 months and there is no real reason to suppose that a recapitalisation is going to stop acquisitions – especially not when the chief shopper for companies, Vin Murria, has been given a new role which focuses on shopping.
Two things stand out though: the new CEO is from IRIS, an accountancy focused company, and the new trading name is IRIS. It has been suggested that it is a merger in name only and that the ‘biter has been bit’. I think it is too early to rule on that one; obviously it looks that way at first glance but IRIS has a brand whereas CSG never really did and it could just be a branding choice.
Since I tend to the view that the legal software market sees itself as more special than it really is, I am not sure a broader professions-dedicated perspective is bad for clients and potential clients of IRIS – it has numerous positives.