Aderant has been acquired by Roper Technologies in a deal that sees the legal software company move from the private equity firm Madison Dearborn Partners for $675 million, net of $20 million in cash tax benefits.
New direction for Roper Technologies?
The acquisition of Aderant seems to fit the Roper Technologies ethos: buying market leading companies that have positive cash flow and Roper Technologies believes that Aderant will generate around $125 million dollars each year for the company. It doesn’t fit into the existing portfolio of technology companies that Roper Technologies has. Until Aderant Roper Technologies companies fit into four streams:
- Industrial Technology contains companies that produce water and fluid handling pumps.
- Energy Systems and controls has companies that deliver control systems, often related to the pump companies.
- Medical and Scientific imaging companies, both handheld and vehicle mounted devices.
- RFID solutions, a diverse rainge of both hardware and software companies.
Aderant doesn’t fit into any of these categories so it will be interesting to see whether this is just the first of several acquisitions that the company will make. That is fits in a niche market is true but it will be interesting to see how Roper Helps Aderant going forward.
The canned statement from Brian Jellison, CEO Roper Technologies seem to support this as well “While our businesses serve a diverse set of niche markets, a common focus on customer intimacy has been a key success factor over our 23-year history. Aderant has a strong history of delivering value and a high customer satisfaction to the legal technology market. Now, as part of the Roper family, Aderant will be even better positioned to grow.”
Stability for Aderant
In coming out of private equity the deal will allow the company to plan for the future. It has a market leading position in the legal market in a sector that it still has room to grow. What this deal will enable Aderant to do is to plan with a longer term horizon than it could have done under a private equity shadow where shorter term gains are often more important than longer term stability and growth.
Chris Giglio, Aderant CEO, commented in the press release: “I am so pleased that Aderant will operate from a permanent home within Roper Technologies. A permanent home enables Aderant to undertake larger strategic initiatives and even more visionary product development. I am proud of the products and services Aderant delivers today, and I am excited about what Roper will enable us to deliver tomorrow.”
Quote from other senior execs are equally positive about the future for the company. It seems that despite working successfully under private equity a shadow has been lifted from the firm.
Chris Cartrett, SVP Global Sales, Aderant, is especially pleased: “We are seeing a real trend in law firms making large investments in new technology. Such decisions go beyond evaluating technology functionality but also involve evaluating the long term strength, stability and vision of the vendor partner. Our permanent home with Roper should assure clients of Aderant’s ambition and stability to lead the industry into the future.”
One wonders whether the possibility of acquisition by a larger software company seeking a niche market that may see the dissolution of the Aderant logo was a concern. It is interesting though that Madison Dearborn did not pursue the IPO route for the software and chose to sell to the technology firm.
Conclusion
The deal is expected to close within 30 days, Roper shares rose 3.7% on the day and investors are clearly happy with the acquisition. What will be interesting will be to see the strategic direction of both companies laid out once the deal has been completed.
For Roper Technologies is this this first of several acquisitions within the legal sector and will those remain independent or move under the Aderant brand which is so strong? Another direction could be to look to grow a stable of professional services products, though this seems less likely.
For Aderant, the stability that Roper Technologies offers gives the leadership scope to plan for the long term future. Mike Barry, EVP Product and Strategy and nine year veteran of Aderant, commented on that future by saying: “Today I am more excited than ever for Aderant’s next chapter. Roper Technologies provides us a unique environment to plan and execute on a truly visionary approach to legal technology. No other vendor in our industry enjoys this same luxury.”
What those plans are, could reveal how ambitious Aderant can become.
