LegalZoom Announces Acquisition of Formation Nation to Accelerate Go-To-Market Strategy and Expand Portfolio of Small Business Solutions

Core Insights - LegalZoom has acquired Formation Nation, enhancing its service offerings for small business customers through improved customer support and technology integration [1][2][4] - The acquisition is part of LegalZoom's strategy to attract higher value customers and differentiate its brand as a premium business formation advisor [2][3] - The transaction closed on February 10, 2025, with LegalZoom paying $49.3 million in cash and approximately 2.2 million restricted shares, plus an additional $15.4 million subject to holdback [4] Financial Performance - LegalZoom reported preliminary financial results for Q4 and full year 2024, estimating revenue of approximately $161.7 million for Q4 and $681.9 million for the full year [11] - The company anticipates an Adjusted EBITDA of approximately $44.2 million for Q4 and $148.1 million for the full year, with net income of approximately $12.9 million for Q4 and $30.0 million for the full year [11][13] - Cash flow provided by operating activities is estimated at approximately $42.6 million for Q4 and $135.6 million for the full year, with free cash flow of approximately $35.9 million for Q4 and $99.9 million for the full year [11][15] Strategic Benefits - The acquisition will allow LegalZoom to leverage Formation Nation's "Inc Authority" brand to cater to customers seeking lower-cost, do-it-yourself business formation solutions [3] - LegalZoom aims to enhance its consultative service and customer education experience through the integration of Formation Nation's customer service expertise [2][4] - The addition of Formation Nation is expected to positively contribute to LegalZoom's Adjusted EBITDA and be accretive to Adjusted Earnings per Share in the first year post-acquisition [4]