Questel Acquires Equinox

Equinox is a Leeds-based IT firm that provides software for law firms which specialise in intellectual property. Founded in 2006, it has since grown to supply almost 250 organisations across 25 countries. Its team comprises tech experts in a variety of professional disciplines, with specialists in development, data management and support. Equinox will continue to operate in Leeds with its full team following the acquisition.

Questel is a global legal technology company headquartered in France. It provides technology solutions for IP professionals, with a service portfolio comprising the entire innovation and IP life cycle. With its acquisition of Equinox, Questel will be able to further expand its share of the international IP management market.

Questel CEO Charles Besson described his excitement at the prospect of the Equinox merger: “Equinox is experiencing strong traction in Europe and we are looking forward to bringing this state-of-the-art solution to law firms around the world. Alongside this acquisition, Questel is on track to become the global leader in the IP Management System market.”

Lawyer Monthly had the pleasure to speak with Andrew Pollard at Ahead Business Consulting to give us some further insight into this transaction:

Can you give us some more background into the two firms and the acquisition?

Equinox is a well-known provider of intellectual property management software (IPMS) for IP law firms. They provide the administrative backbone for over half the firms in the UK and many others around the globe. Based in Leeds, with around 40 staff, they have developed and marketed a package that increases efficiency and reduces errors by combining workflow, document management, billing, reporting, renewals and a client portal.

Questel delivers intellectual property solutions across the entire innovation lifecycle to more than 20,000 clients and 1.5 million users across 30 countries. They offer a comprehensive software suite for searching, analysing and managing inventions and IP assets together with services supporting the IP lifecycle, including prior art searches, patent drafting, international filing, translation and renewals.

There is clear synergy. Equinox needed a global partner to drive overseas sales and understand local requirements. They also need to leverage integrations with third party products to provide clients with a seamless service. Questel’s portfolio lacked a compelling IPMS offering suitable for law firms and had a small UK client base. Together, and with Equinox’s proven technology development speed to market, there is a great opportunity to become a dominant global provider.

What role did the team at Ahead Business Consulting play as part of the merger?

We at Ahead Business Consulting were already working with Equinox before the merger to help them improve their strategy and performance, to bring greater clarity, focus and effectiveness. Equinox had asked Ahead Business Consulting to improve their project delivery for larger clients. We overcame that delivery challenge, but the question remained as to whether Equinox had what it took to deliver in this space – strong project management, robust core offering, ability to contain the cost of customisation, relationship management to manage against scope-creep and sufficient cash flow to fund the period before the client moved to a SaaS payment model.

Over the next quarter we helped upgrade the management information, splitting the P&L between the smaller law firms who took the off-the-shelf product and the larger firms looking to replicate unique internal processes and interface to other bespoke systems. We trained on sales and practical project management, revisited the contractual terms and advised on the organisation structure. Above all we focused attention on the four things that really mattered: small firm sales, staff, service and large firm delivery. Structured as meta-projects, these four areas became pivotal in moving to a robust management structure.

We at Ahead Business Consulting were already working with Equinox before the merger to help them improve their strategy and performance, to bring greater clarity, focus and effectiveness.

The evidence was clear – a sharper focus on the sales process for small firms and a modular build for large firms could create significant growth in current markets. But international growth in the US, most of Europe and the Far East would need a partner.  The IP technology sector was consolidating fast – Equinox could not risk being in direct competition with a billion-dollar corporate.

We co-created the acquisition strategy with the Equinox directors. We documented the red lines for them, how we saw the valuation, the way we would pitch the company and the potential acquirers. Knowing that due diligence would be needed later, we kick-started the preparatory work to streamline the transaction and maximise value.

Why are Ahead Business Consulting well-positioned to advise on acquisitions of this nature? What skills did the team bring to the table?

Our work fell into three phases. In phase 1 we identified the immediate challenges, set the strategy, and implemented it. Without making significant changes to the operation of Equinox, the company would not have shown its true value. The Equinox board would have lacked the information, analysis and support to make a decision to be acquired.

In phase 2 we acted as intermediary between Equinox and potential buyers. This freed up management time and created negotiating space. A negotiating intermediary can have frank conversations, signal direction and pause to collect information which the management team would feel necessary to provide immediately.

Due diligence is a project in its own right, which typically requires the creation of a lot of material.  We managed this process, creating forecasts, planning, providing analysis and ensuring the information provided was complete, timely, without conflict and accurate.

Were any challenges encountered during the course of the acquisition? How were these overcome?

The biggest challenge is about the people. Equinox is a young management team, selling a company for the first time that they have nurtured for 15 years. It is incredibly emotional and stressful, but at the same time they needed to focus on the key indicators that drive their valuation. Together with Ward Hadaway and Azets, we managed to dial down the stress through good planning, strong communication and pragmatic advice.

Managing expectations is also key. Complex deals take time, especially with an overseas acquirer and turbulent financial times. There are several stakeholder groups to consider, including Equinox’s wider shareholders and staff. In our strategy work we wrote down a core value: “Equinox is a totally cool place to work”. That ethos is central to the way management behave and drives the culture. It is vital that the way the deal was set out preserved that ethos.

What impact do you anticipate the success of this merger to have on the IP sector in the UK and overseas?

Over the next few years, we expect widespread consolidation in the broad innovation space.  Market research has predicted growth of threefold between 2021 and 2028, driven by a combination of a continued rise in patent filings and the rising costs and risks associated with inefficient IP management.

For Questel and Equinox, we see a very bright future. Many competitor IPMS products are close to their end of life, with providers struggling with rising costs of maintenance and a reluctance to deliver new features. Corporates with in-house IP divisions and law firms will face rising IT and staff costs, making it increasingly sensible to seek efficiencies. With the global backing of Questel, we think the Equinox software will grow from being the largest UK law firm IPMS to a top five provider for law firms and small corporates globally.

Do you expect that Ahead Business Consulting will advise on further transactions of this nature in 2023?

We help businesses all over the UK boost their potential. We resolve problems, unlock new thinking and bring ideas to life. We focus on the power of people to achieve change for better. This year we expect half of our engagements will require external investment or acquisition to achieve change. A proportion will be acquisitions, while others will be equity or loan investments. The mix will be governed by market conditions, but in all cases Ahead Business Consulting will bring fresh focus and new insights.