LegalZoom acquires Formation Nation

LegalZoom has acquired Formation Nation for $49.3 million in cash upfront and approximately 2.2 million restricted shares of LZ common stock, subject to lockup and voting agreements. An additional $15.4 million in cash is subject to a one-year holdback and customary adjustments.

Founded in 1989, Formation Nation offers business formation and compliance services under “Nevada Corporate Headquarters” (NCH) and low-cost formations through “Inc Authority.”

With this acquisition, LegalZoom gains over 140 experienced small business service experts.

The Formation Nation acquisition also supports LegalZoom’s customer segmentation strategy. LegalZoom will leverage Formation Nation’s “Inc Authority” brand, which provides business formation offerings at a lower priced alternative, to service customers seeking “do-it-yourself” solutions, ensuring the appropriate level of service across its customer base and reserving the LegalZoom brand for more premium offerings.

“With industry leading TrustPilot scores of 4.9 (Inc Authority) and 5.0 (NCH) out of 5.0, the addition of Formation Nation will further distinguish LegalZoom as an industry leader focused on quality. Under the thirty plus year leadership of Formation Nation CEO Cort Christie, Inc Authority President Trevor Rowley and NCH President Raymond Marin, the company has built a strong culture of excellence centered around customer service. We are thrilled to partner with the entire team and unite our cultures of service and technology to create an even stronger LegalZoom.” – Jeff Stibel, Chairman and CEO of LegalZoom.

Bottom Line: Birds of a feather flock together.