Chambers and Partners, the global legal rankings publisher, is up for sale. The auction process is expected to complete during July-September. The private equity owner believes it can get at least £400mn for the company – almost 4x what it paid in 2018.
The 33-year-old, UK-based company publishes 15 guides rating the top lawyers in 70 countries and over 200 jurisdictions. Its reputation is based on the fact that its 200 researchers conduct tens of thousands of interviews every year with lawyers and their clients. This year, 20,000 lawyers and 3,000 firms and networks have been ranked. But one critic has written that “Only around 2% of all US attorneys are recommended in Chambers’ US edition. And it’s a low percentage in other markets as well. Chambers is deliberately cautious about admitting new entrants each year. And it’s that elitism which gives the publication its desirability and cachet.”
The extra magic of the business model is that law firms, large and small, submit their applications to be ranked along with a list of up to 10 recommended referees. Chambers’ researchers then interview the provided referees and also others to ensure objectivity and eliminate bias. If a company is ranked (from Band 1 all the way down to Band 7), the law firm is entitled to subscribe for thousands of whatever currency and provide an ‘advertorial’ profile and also to use quotes and ratings from Chambers in their own promotional material.
You may have seen Chambers plaques displayed proudly in law firms. They cost £365 each, and £465 buys a crystal desktop version. If you have searched for lawyers, you will know just how widely Chambers is quoted, which explains why almost 100% of those who can subscribe do – and why very few ever drop out. It is the ultimate ‘quality mark’ in the legal profession in many countries.
Those “no churn” subscriptions may account for 70% of the revenues and a further 10% comes from Chambers Insights which are reports (again only available for ranked subscribers to buy) of information amassed by the researchers but not published: law firms can get insights into how their own people and services are rated by existing and prospective clients. The rest of the revenue comes from awards competitions, conferences and webinars.
Inflexion private equity acquired Chambers for £110m (5x revenue) in 2018, the year which also saw other legal publishers changing hands. In the UK, Law Business Research was acquired by Leichtman Capital. Martindale Hubbell (the once gilt-edged pioneer of Chambers-like profiles in the US) was sold to Internet Brands which merged it with legal directory publisher Avvo.
In the five years since, Chambers has been triumphantly transformed from a publisher of printed directories to a 100% digital service, with revenue breakdown broadly as follows: UK (16%), Rest of Europe (26%) and Rest of World, principally the US (57%).
Inflexion is hoping to exploit the rising multiples for B2B data businesses, with prospective trade buyers including: ThomsonReuters (whose WestLaw legal division accounts for 43% of total revenue), RELX (21%), Wolters Kluwer (16%) and Avvo-Martindale.
But private equity firms will also appetised by a deal that may match the revenue multiples of some recent deals, including: RMS (bought by Moody’s from DMGT for $2bn, 6x revenue); Oil Price Information Service (News Corp from S&P Global for $1.2bn, 9x); SurePrep (ThomsonReuters for $500mn, 8x), Pharma Intelligence (Informa to Warburg Pincus for $2.6bn, 18x), and Lloyd’s List Intelligence (Informa to Montague for $465mn, 9x).
On that basis, Chambers may be acquired for at least £440mn – 10x its likely £44mn revenue for 2022 ($53mn). Or 25x EBITDA – maybe even higher than the 20-25x multiple in the recent £275mn acquisition of pricing company AgriBriefing:
| £mn Chambers Global Holdings Ltd | 2022** | 2021 | 2020 | g2019 | 2018 |
| Revenue | 44 | 35 | 32 | 26 | 22 |
| EBITDA | 18 | 13 | 10 | 7 | 7 |
| Margin | 40% | 37% | 31% | 27% | 32% |
| Headcount | 360 | 340 | 317 | 296 |
Although social media has buzzed with complaints about Chambers’ “private equity price increases” in recent years, most of the sniping includes unrestrained gushing about the importance of its rankings. Chambers is, well, untouchable. For all the claims elsewhere that this or that award is, say, the breadmaking industry’s equivalent of the Oscars, nobody doubts that Chambers really is the ultimate recognition for law firms. Just like the real Oscars. Just search online to see the hundreds of press releases from law firm celebrating their inclusion.
That – and the fact that Chambers still has a long way to maximise its footprint in the US (which has 10 times as many law firms as the UK) – shows there is a lot of growth still to come. That’s why the pre-eminent legal publishers ThomsonReuters and RELX will be captivated by the forthcoming auction. But it may take private equity not only to pay the highest price but also to have the broadest vision for a company whose future might be about more than the law.
The clues to a lateral view of Chambers’ potential are in its Global Guide for 2023. Its insights from 26,000 interviews with lawyers and clients naturally highlight the trends in M&A, the home turf of law firms everywhere. But the growing activity (and expenditure) on sustainability, cybersecurity, and international supply chain management underline the crucial role lawyers have in the Environmental, Social and Governance (ESG) issues increasingly confronting companies. The Chambers data on ‘who is doing what and how’ clearly has a value way beyond the mere hiring of lawyers. At the very least, it feels like a potential new database for global business.
That’s the (even more) expansive view of why Chambers might eventually achieve a valuation beyond the seemingly toppy £440mn.
But the whole process emphasises the potential value of information businesses with must-have data on prices, ratings, rankings and trends. Companies as diverse as Fitch, Moody’s, S&P Global, Argus Media, and even Times Higher Education World University Rankings (also owned by Inflexion private equity) show the power of such data to become embedded in their markets and to sustain high-value subscriptions. The impending auction (£900m?) of Ascential’s WGSN global trends forecasting platform will reinforce the point. And the AgriBriefing and Fastmarkets deals of recent weeks show how you don’t have to be a global monolith to build such a business in well-defined markets.
It’s no accident, of course, that many of these operations began their lives as part of the workload of specialist journalists regularly ringing their contacts for prices and rumours. That’s why all single-sector B2B media should study what is happening: whether they realise it or not, Chambers should inspire its smaller cousins to get involved. Almost every B2B vertical could generate its version of the pricing data of Argus or the rankings of Chambers – with subscriptions to match.
Established B2B media in mighty supply chain markets like building and food manufacturing might find it surprisingly easy to identify data gaps which – over time – could become must-have proprietary information on prices, costs, activity and trends. Reader-users will be prepared to pay for such data long after many other types of news and information have become freely available products of AI. There will also be data opportunities in many smaller business sectors, whether for hairdressers, auto dealers, theatres, or hotels. And the “prosumer” appetite for trends, track records and expertise might also be ripe for exploitation by the likes of TrustPilot, ConsumerReports in the US, and price comparison sites everywhere. There’s a lot to go for.
