LegalZoom Acquires Formation Nation to Bolster Small Business Offerings
Deal News | Feb 10, 2025 | Globenewswire
LegalZoom, a prominent legal services platform, has acquired Formation Nation, a small business services company known for its exemplary customer service. This strategic acquisition will enhance LegalZoom's offerings in business formation and compliance by integrating Formation Nation's strong customer support program. The acquisition aligns with LegalZoom’s strategy to attract premium customers and expand its product portfolio. Formation Nation offers both high-end compliance services and low-cost business formations under its Nevada Corporate Headquarters (NCH) and Inc Authority brands. With an upfront payment of $49.3 million in cash and approximately 2.2 million restricted shares, the acquisition is set to positively impact Adjusted EBITDA and earnings per share. LegalZoom's financial results for Q4 2024 show strong revenues, net income, and cash flows, showcasing a robust financial footing for 2025.
Sectors
- Legal Services
- Small Business Services
- Technology
Geography
- United States – Both LegalZoom and Formation Nation operate primarily within the United States.
Industry
- Legal Services – LegalZoom provides online legal services, making this sector particularly pertinent.
- Small Business Services – Formation Nation and LegalZoom both offer services targeting small businesses, focusing on business formation and compliance.
- Technology – LegalZoom utilizes a technology-driven platform for delivering its legal services.
Financials
- $49.3 million + 2.2 million restricted shares – The acquisition price for Formation Nation by LegalZoom, including an upfront cash component and restricted shares.
- $15.4 million – Additional cash subject to a one-year holdback and customary adjustments in the acquisition deal.
- $681.9 million – LegalZoom's estimated revenue for the year ended December 31, 2024.
- $30.0 million – Net income of LegalZoom for the year ended December 31, 2024.
- $148.1 million – Adjusted EBITDA of LegalZoom for the year ended December 31, 2024.
- $99.9 million – Free cash flow of LegalZoom for the year ended December 31, 2024.
Participants
| Name | Role | Type | Description |
|---|---|---|---|
| LegalZoom | Bidding Company | Company | A leading online legal services platform focused on business formation and compliance. |
| Formation Nation | Target Company | Company | A company offering small business formation and compliance services, known for its customer service. |
| Nevada Corporate Headquarters (NCH) | Other Company | Company | Part of Formation Nation; provides high-end compliance services. |
| Inc Authority | Other Company | Company | Part of Formation Nation; offers low-cost business formation solutions. |
| Jeff Stibel | CEO of LegalZoom | Person | Chairman and CEO of LegalZoom. |
| Cort Christie | CEO of Formation Nation | Person | Chief Executive Officer and Founder of Formation Nation. |