Four months after receiving a $200 million strategic investment, Onit, a Houston company that provides enterprise workflow products for large corporations and legal departments, is putting that money to good use — acquiring SimpleLegal, a six-year-old Silicon Valley company that provides legal spend, matter and vendor management software to the mid-sized corporate legal market.
The deal will extend Onit’s ability to serve a broader range of corporations and legal departments, Eric M. Elfman, Onit’s CEO and cofounder, told me Friday. While Onit targets the high end of the market — complex legal departments with more than $25 million in legal spend — SimpleLegal is more focused on the middle market.
While some companies have sought to serve this middle market by “dumbing down” their software, this acquisition allows Onit to offer an innovative product that is specifically tailored for that market, Elfman said.
For that reason, Onit and SimpleLegal will be maintained as totally separate product lines. At the same time, Elfman said, he foresees opportunities for developing shared services for specific uses common across both markets, such as managing alternative fee agreements.
All 55 SimpleLegal employees will join Onit, which has 180 employees, and remain in their Mountain View location. Both organizations’ management teams will remain intact, with Nathan Wenzel, CEO and co-founder of SimpleLegal, becoming general manager of SimpleLegal, reporting to Elfman as CEO.
The two companies have virtually no overlap in their current customers, Elfman said.
In January, Onit announced a $200 million strategic investment by K1 Investment Management, a Los Angeles private equity firm that specializes in investments in high-growth enterprise software companies. In a LawNext podcast I recorded with Elfman at the time, he said that the investment would be used, in part, to make acquisitions that would augment Onit’s organic story but not replace the story.
Onit launched nine years ago, originally as a Web-based project management tool. Elfman and cofounder Eric Smith had previously founded DataCert, a provider of matter management and legal and IP spend management for corporate legal departments that was acquired by Wolters Kluwer.
SimpleLegal, which came out of the Y Combinator startup accelerator in 2013, has gained a reputation as an innovative and well-designed SaaS alternative for e-billing and matter management in a market largely dominated by older products such as Thomson Reuters Legal Tracker, formerly known as Serengeti Tracker. In 2017, it secured a $10 million Series A investment, on top of a 2015 $1.6 million seed round.
In our conversation Friday, Elfman pointed to news that Onit competitor Mitratech had laid off 83 employees and stressed his commitment to keeping Onit innovative. He believes the acquisition of SimpleLegal furthers that goal.
“At the end of the day,” Elfman said, “it’s about bringing a better mousetrap to enterprise legal management and spend management.”