IP Services Buyout

Acquistion Values CPA Global at $1.5B

A majority stake in CPA Global, one of the largest patent and legal services companies, was recently acquired by a buyout group led by Intermediate Capital Group PLC (ICP.LN). 

According to Dow Jones in London and the Financial Times, details of the transaction weren’t disclosed but a person close to the deal said the enterprise value of the deal was around GBP470 million and ICG is taking a 47% stake for that. Management will hold 22% and the balance will be held by the company’s current 300 or so shareholders, most of whom are partners at the law firms that founded the business.

The way I read this is that ICG’s 47% stake is worth about $734 million (USD) and the entire company’s value is approximately GBP950 or just under $1.5 billion (USD). Not a bad valuation for an effectively low-tech IP services business.

CPA’s crown jewels, as I understand them, are its IP renewals business. With scores of patent and trademark holders’ maintenance fees paid through CPA there is a significant “float,” which much like a bank or other financial institution CPA is able to monetize. At current, historically low interest rates CPA Global’s renewals business is an excellent buy. With even modest inflation, which most observers feel is inevitable, in a few years CPA is likely to be worth a hearty multiple of what ICG paid for it. Cheers.

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