Once again independent after a two-year marriage to U.K.-based Incisive Media, ALM is positioning itself for growth.
In early September, ALM and Incisive announced they would separate in a debt-for-equity restructuring. ALM's primary lender, the Royal Bank of Scotland, converted approximately one-third of the ALM debt into equity, while private-equity firm Apex Partners gave up some of its ownership stake. ALM is now 51% owned by funds advised by Apex Partners (which previously controlled 71%) and 49% by Royal Bank of Scotland. Incisive, which had a separate debt structure dating from its acquisition by Apex in 2006, is now controlled by a consortium of lenders, leaving Apex with minimal ownership.
In a research note, David Curle, director and lead analyst for Outsell, wrote, “Both U.K. and U.S. operations had posted operating profits, but the burden of the existing debt structure made the ongoing business unsustainable.”
Curle added: “The new alignment gives properties on both sides of the pond some liberating room to maneuver into a better future given the current market conditions. It also represents the good sense of all involved to take losses and renegotiate equity stakes, rather than the other option of the banks forcing a sale of assets in an uncertain M&A market with very unpredictable results.”
William Pollak is president-CEO of ALM, the same position he held prior to its 2007 acquisition. As CEO of Incisive Media-North America, Pollak played a key role on the management team of the combined company. He said Incisive hired advisers to help explore restructuring options last October, shortly after world financial markets fell sharply.
“We explored every alternative you can imagine,” Pollak said. “In the spring, it began to be clear that going our separate ways might be the best solution. Then it took a while to negotiate.”
Noting that other media companies may have to restructure due to current economic conditions, Pollak advised his peers “to impress upon your investors the need to keep investing in the business.”
Michael Parker, managing director of AdMedia Partners, said other media companies will be watching Incisive and ALM in the wake of the split. “If it works, I think a lot of people will say, "What a great strategy.' ”
ALM will invest primarily in two areas, “product development on the end-user/subscriber side of the house and technology in support of all of our Web sites,” Pollak said. ALM serves two vertical categories—law and commercial real estate—with such brands as American Lawyer, GlobeSt.com, Law.com, National Law Journal and Real Estate Forum.
On the legal side of the business, Pollak said ALM will develop end-user revenue streams in two areas: substantive law and the business of law. Substantive law includes legal cases, verdicts and settlements; ALM has subscription database products such as VerdictSearch in this category. In the near future, ALM will introduce new, competitive intelligence products based upon its expertise in the business of law, Pollak said. “These will be end-user supported, but they will have an advertising component, as well,” he said.
ALM will continue to upgrade its Web sites, a project that was well under way under Incisive's ownership. The Web site for ALM's flagship American Lawyer was relaunched in May 2008. Corporate Counsel's Web site was relaunched last month. M