Elevate’s recent acquisitions belie a long-game strategy. Elevate founder, Liam Brown, explains.
Elevate recently acquired five companies in less than three months. I’ve been asked: why those companies in particular, and why so many in such a short space of time? To answer those questions, I should first answer the deeper question of what is Elevate’s ‘Why?’ Then, I need to give a clear-eyed assessment of how we’ve been performing in pursuit of that purpose. After that, I can provide answers regarding the acquisitions and timing that are accurate and will make sense to readers.
Let’s start with “Why did we start Elevate?” Back in 2011, we saw demand for legal services outstripping the growth of the economy, and that demand was being driven by trends such as the explosion of data, regulation, and globalization. Increasingly, legal was woven into the day-to-day operations of the business, rather than being a silo function. More internal and external customers began demanding even more legal services, at the same time they were becoming accustomed to ‘always-on, instant service’ in their consumer life. Service demand on law departments and law firms had never been higher – and that pressure wasn’t going away.
This was causing law departments and law firms to grow, become more decentralized, embedded, and integrated within global business, and to become more organizationally complex. We saw the emergence of in-sourcing, legal operations, procurement practices such as ebilling and RFPs, matter management, process design, performance metrics, and an explosion of legal tech. General counsel and law firm leaders were starting to talk about the need to manage their organizations with business discipline, but who could they turn to for help?
Our vision was to build a consulting, technology, and services company exclusively focused on law. What we called “Accenture for Law.”
We started Elevate by investing our own capital. At first, many of my co-founders and colleagues worked for little or no pay. Many continued to work for below market compensation for many years. We shared Elevate equity widely. What we all had in common was that we loved seeing our insights, ideas, and hard work help customers solve problems. We invested all profits back into the business so that we could build out Solutions for customers. ‘Solutions’ at Elevate means expertise (people), methods and practices (process), and tools (technology). These strategic elements were all part of building a company ‘for us and for our customers.’
Over time, we have built out a wide range of the capabilities that law departments and law firms require. Our 1,200-person, multidisciplinary organization of lawyers, engineers, consultants, data scientists, and business professionals serves customers around the world.
Executing our strategy
This is the original strategy plan that we used as our roadmap:
Some customers pushed us to grow faster and offer more capabilities in more locations. It was hard to grow all these capabilities while scaling and growing our global footprint, and do so without raising venture capital or private equity. All of us had prior experience running companies where investors had control – their investment horizons can be short, they can be impatient, they can change strategy, or sell the company. Customers and employees can be losers when that happens.
We decided that we would be financially conservative, grow within our means, and build our capital structure carefully so that it aligned with our purpose.
We did take some minor investments after a few years, from outside high net worth individuals, but these investments did not come with any controls; instead, we used ‘having investors’ to implement professional governance – the kind of board and discipline of management and reporting that you would expect to see in any business backed by institutional investors. This allowed us to remain disciplined about growing profitably within our means.
At the end of 2016, five years into our journey, we started seeing the beginning of consolidation in the industry, the emergence of the Big 4 as competitors, as well as some law firms starting to offer law company consulting, services, or technology. We realized that we needed Elevate to become well-known enough, large enough, stable enough, trusted enough to remain a competitor long term.
Even though we were growing at a consistent clip of 25% per annum, we needed to place more bets on more areas of investment. We’d had some success with our technology products, but we needed to invest more in product management, engineering, and customer success for our enterprise legal management (ELM) Cael software. Competitor point-solution legal tech was springing up everywhere, and some competitive consolidation was happening, e.g. Mitratech acquired our Thinksmart workflow partner and subsequently limited our ability to work with them.
AI was becoming more important for our services, too. We launched our “E=ME2” or “Elevate equals Machines and Expertise in Everything” initiative in 2012, but the AI companies that we worked with were beginning to be acquired by legal publishers or private equity, and raising the prices of their services to us.
We’d had success in our consulting business, but customers wanted more consulting from us, integrated globally, to work with them wherever they had operations. We had decided we weren’t going to hire consultants just because of their expertise and book of business. We wanted to find consultants who were collaborative, focused on customer solutions rather than selling hours, and were a good culture fit so that we could operate our consulting business globally, rather than as a hotel for consultants running their own practice in silos. This meant we had to invest in growing our own consultants.
Most of our business during the first five years had come from customers who had a relationship with our leadership team. And our leadership team often wore multiple hats: being customer-facing and also managing a department or function. That wasn’t sustainable – we were wearing out even our most passionate leaders. They were starting to feel like they weren’t being successful at either role – even while our whole company overall was incredibly successful!
We started career planning to set everyone on a flight path toward their highest and best use – what they were passionate about. That required investing in more managers to take over their business or sales responsibilities. We had to invest in building a sales team. We hired a sales leader and sales people for the first time, and launched strategic account management programs.
All of our legal services businesses were growing quickly. Our customer base grew by referral, and once we started working with customers in one area, we’d often be asked to help in another area. It was easy to convince ourselves that everything was going swimmingly.
Be wary of the Kool Aid!
We chose to name our company “Elevate” for two reasons. First, it reflected our aspiration to help customers imagine a better future for their legal operations – and then actually help them get there from where they are today: ‘Elevate’ their operations, so to speak. Second, it spoke to our hope that our colleagues would find their careers at Elevate challenging, fulfilling, and fun – and that they would feel they were growing while we worked together, ‘Elevating’ their career.
But we started to notice little signals in our Net Promoter Score (NPS), or Employee Engagement feedback, that our customers weren’t getting the consistent level of service that they deserved and that some of our people were feeling overworked.
Customers were giving us the benefit of the doubt – we’d parachute a leader in to resolve issues quickly if a customer told us there was a problem. But for the first time ever, our NPS dropped – from 41 to 39. What if customers stopped telling us when they were disappointed? What if these were early signals of deeper service problems?
Our own people were giving us the benefit of the doubt, too. Our retention rates are world-class, but we noticed in our weekly pulse dashboard that some of our people were feeling only 1 or 2 out of a 5-point scale, and for weeks at a time. When our leaders parachuted in to talk to these people, they would tell us that they felt overworked, or that customers were too demanding, or that their manager wasn’t supporting them or engaged with them enough, or that they didn’t feel valued enough. Uh oh.
[Query: how many large law firms do a “pulse check” on a weekly (or monthly or yearly) basis? Further, what happens to legal service organizations who faithfully follow this discipline for 10+ years? For more information on pulse checks, see David Mizne, “15Five 2.0: Putting the People Back in People Analytics,” 15Five. WDH]
What got us here isn’t necessarily going to get us there
These signals of inconsistent service and some team members feeling disenchanted convinced us that we needed to invest in more experienced managers and leaders. The team that launched Elevate was approaching our limits and we needed help.
We thought long and hard about where our gaps were. We didn’t want to poach from our competitors, so we decided that the best way forward was to invite seasoned leaders to join Elevate, by persuading them to tie their rafts to ours. We then asked customers (even including those that had decided not to work with Elevate) to tell us which entrepreneurs, managers, and companies they thought were our best competitors!
How would we finance all these organic investments and acquisitions in a way that ensured that management didn’t give up control? The law department of one of our customers, Morgan Stanley, introduced us to their private credit and equity group, Expansion Capital. The Expansion Capital team’s advice was helpful in designing our growth financing strategy. By the end of 2017, we closed a $25 million credit facility with them to finance organic investments and the strategic acquisitions.
The acquisitions we made were based on the following three pillars that have been at the heart of Elevate for many years: Strategy, Culture, and Customers.
Executing our strategy – again
Why this company? Why now? When determining whether a potential acquisition would be a good match, the first thing that Elevate’s Executive Management Team (EMT) looked at was how well a company would help us execute our wider strategy.
We developed a comprehensive 20-point acquisition assessment framework. Which element of our strategy plan does a given acquisition support? How does an acquisition strengthen Elevate’s offerings or management? How immediately will an acquisition improve our mission to provide practical ways for improving efficiency, quality, and outcomes for law departments and law firms?
Important to this story is that each acquisition was in the works for months, if not years. The speed of these acquisitions (5 in the span of about 10 weeks) is a bit deceptive; our EMT spent a lot of time working with the management teams of each company, figuring out whether and how much we were aligned with them. This careful due diligence process often involved a period of working in tandem with these companies to combine services for customers. Throughout these working relationships, a series of discussions took place between our respective management teams at many levels, all focused on alignment of vision, mission, strategy, and principles.
Now, after walking down the same path together with these other companies for a while, we’re executing a mutually agreed plan.
But here’s the catch: even well-planned acquisitions are not guaranteed to work.
Integration, culture, and diversity
I have worked on over two dozen acquisitions throughout my career. Early on, I specialized in turnarounds of failing acquisitions and I learned a lot from that experience, which informs Elevate’s approach.
Many acquisitions end up failing because the parties don’t plan enough, or in some cases deliberately leave too much ambiguity, kicking the can down the road on some tough decisions. We put a lot of planning, specificity, and even difficult conversations into our acquisitions before we close. We got to know the founders on a personal, as well as a professional level. We got to know their personal ‘Why?’, what gets them out of bed in the morning, what they fear.
This kind of intimate culture at Elevate is partly based on our principle to proactively embrace different points of view. If a company’s culture is its ‘DNA’, then a sort of ‘genetic diversity’ prevails at Elevate. We have a diverse set of viewpoints and perspectives that is enriched by our acquisition process. I’m a huge believer in embracing different points of view and the power of conversation to develop a shared agreement on where we are headed, what our priorities are, and who will do what.
Not only have we been careful to make sure that acquisitions are a culture fit, where the selling entrepreneurs’ long-term aspirations align with the legacy Elevate management’s, but we have also structured the economic terms to reward achieving shared goals so that these entrepreneurs stay to become integral members of the Elevate EMT going forward. One of our success measures for acquisitions is, “Are the key people still with us after three years?” So far, the answer is a resounding yes. Virtually everybody working for companies acquired by Elevate over the years has remained with Elevate long-term, and most are still with us to this day.
One reason people stick with us post-acquisition is that our approach is to ‘first, do no harm’. We have a multi-year approach to integrations where we project manage rapid integration of horizontal capabilities such as IT and infosec, accounting, and HR, but we take a more organic approach to customer-facing services and solutions, leaving founders and managers in charge much as they had been pre-acquisition. Managers from acquired companies assume important roles at the combined Elevate business, creating continuity and stability throughout the integration.
We encourage legacy Elevate and newly acquired managers to take the time to get to know each other and each other’s journeys. We are careful to not take a “we are the acquirer so you will do it our way” approach. Rather, by listening to each other respectfully, sometimes the combined teams choose to proceed with Elevate’s practices, sometimes the acquired company’s practices, and then sometimes the integration teams design a ‘Third Way’, some kind of superior combination of best practices from both.
What’s in this for customers?
From a legacy Elevate customer perspective, these acquisitions were made to help us do a better job solving customer problems – either to fill capabilities gaps or to provide managers and leadership that we needed. We acknowledge that there is a period of time immediately post-acquisition that Elevate’s EMT has been focused on the acquisitions. One of the reasons we decided to do them all together was to use a common project management methodology and team to efficiently get through this period as quickly as possible. We hope that legacy Elevate customers will feel the impact of these acquisitions in a maturing and improving service.
From the perspective of the customers of the companies that have joined Elevate, first, we do no harm. Customers will continue to work with the same account and service teams that they have been used to working with. As the integrations proceed, customers will have access to the breadth and depth of Elevate capabilities – more lawyers, consultants, subject matter experts, geographies, technologies, etc. Some customers prefer to buy from multiple providers and piece the solutions together, but for those customers who look to converge or reduce the number of providers and simplify their supply chain, Elevate is a ‘one stop’ integrated provider.
Brand migration needs to be handled sensitively. Brand equity is important not only to the founders who have combined their businesses with Elevate, but also to their customers, who they have often worked with for years. While we ultimately migrate all acquisitions to one Elevate brand, reflecting one integrated provider, we do this in stages, over time – considering all stakeholder perspectives.
Launching a successful company is hard. Sustaining a successful company is even harder. There are no shortcuts. Organic growth provides some of the pieces of this large jigsaw puzzle. Acquisitions provide others. We’ve brought some great companies together – each with their own history of success. Elevate is now home to an even richer team of leaders, managers, and experts, with great experiences and ideas for the future.
Together, we aspire to build the law company. We are methodically building a stable, diverse, scale business with global reach and staying power – to help those law department and law firm customers that seek to ‘Elevate’ their operations for tomorrow.