Dutch firm to buy legal software company Brightflag for €425m
It will mean big returns and paydays for investors such as Enterprise Ireland and Brightflag's founders, Ian Nolan and Alex Kelly. Mr Nolan is Brightflag's CEO, while Mr Kelly is its chief operating officer. They founded the business in 2014.
Wolters Kluwer said the acquisition will strengthen its legal and regulatory division's presence among mid-sized corporations in the US and Europe.
Brightflag is an AI-powered legal operations platform designed to streamline matter management, control legal spend and enhance collaboration between corporate legal departments and outside counsel.
The company has 155 full-time employees who will join Wolters Kluwer's legal and regulatory division.
Last year, Brightflag's revenues increased by 36pc to reach about €22m and, as of last month, the company had attained €27m annual recurring revenue. Brightflag revenues are about 95pc recurring in nature while about 60pc is generated from US customers.
The acquisition is expected to achieve a return on invested capital at or above Wolters Kluwer's after tax weighted average cost of capital of 8pc in its fifth full year of ownership.
The Dutch firm said that in the near term, the acquisition – which is on target to close next month – is expected to have an immaterial impact on its adjusted earnings. 'Since our founding, Brightflag has been committed to revolutionising legal spend and matter management through AI-driven innovation,' Mr Nolan said. 'Wolters Kluwer shares our vision for leveraging advanced technology to enhance legal operations.'
Brightflag has raised tens of millions of dollars in funding since it was established, including a $28m funding round in 2023. Its backers include Sands Capital Partners, Tribal Ventures, Frontline Ventures and One Peak Partners.
The latest set of publicly-available accounts for Brightflag show that in February 2023, the group completed the refinancing of its debt facility. That resulted in the repayment of its €8m in debt outstanding at the end of 2023, which was replaced with a €15m term loan facility.
The company made a €5.8m loss in 2023, compared to a €10.8m loss in 2022. The 2023 accounts noted that the firm expected to be cashflow positive by early last year. Its revenue in 2023 rose to €15.9m from €11.6m in 2022.
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