Thursday, September 22, 2016

LexisNexis Acquires Intelligize: Intelliize + Lex Machina = A Bigger Data Play?

Yesterday LexisNexis announced their intent to acquire Intelligize -- one of those start up gems that came late to the SEC research party and became the "belle of the ball."  Well really, it was  completely different kind of SEC research product that  not only provided deep faceted searching of documents, but introduced powerful algorithms which produce unique insights into SEC comment letters, no action letters and standard  corporate filings.  Today I had the opportunity to discuss the Lexis- Intelligize deal with Jeff Pfeifer, Lexis VP of Product Management and Todd Hicks, CEO of Intelligize.

Intelligize and Securities Mosaic? Do Customers Need Both? In 2013 Lexis bought another "boutique" securities product  with a loyal following called Securities Mosaic. It is hard to see why Lexis would retain both Securities Mosaic and Intelligize, especially when one of them, Intelligize is driven by  more sophisticated technology. Here is a clue. Securities Mosciac will move into the Intelligize organization where both products will be managed by Todd Hicks the current CEO of Intelligize. In today's call, Hicks indicated that they plan to take time and conduct  "a thoughtful assessment of the  product roadmaps for each product" before determining if the products should be merged or remain separate.  For the remainder of 2016, both products will operate separately within LexisNexis North American Research Solutions organization. In January the two product teams will come together within LexisNexis under the leadership of Todd Hicks.


Intelligize and Lex Machina for Securities - the Bigger Data Play?  Less than a year ago LexisNexis purchased Lex Machina  a litigation analytics product.  It seems unlikely that it is a mere coincidence that the first non-IP module for Lex Machina  was focused on securities law and it launched only six weeks ago.  The more interesting alignment of Lexis products may be the convergence of these two securities data sets powered by algorithms and data: Lex Machina for securities litigation  and Intelligize for securities transactions.  Could  a marriage of Intelligize and Lex Machina for Securities Litigation create a whole new breed of legal intelligence platform? Imagine a product that identifies the documents and clauses that are most vulnerable to litigation. Imagine a product that analyses SEC filings and predicts events such as shareholder activism, takeover targets and lawsuits!

Lexis Content Acquisition Strategy. For the past few years LexisNexis  has been collecting legal content gems - Law360, Lex Machina, MLex. Instead of integrating them into the massive LexisNexis organization, each company has remained a stand alone operation retaining their entrepreneurial culture, their key talent and their client relationships. Core Lexis content is being leveraged to enhance the offering of the smaller companies. At some point it would make sense for  - Lexis to start aligning some of the content synergies between the acquired gems. Are they ready to to that?

Why Lexis and Intelligize Agreed to the Deal?
According to Jeff Pfeifer, Lexis VP of Product Management, Lexis has been focused on developing solutions that provide deeper insights using machine learning and analytics. That is.... insights which can't be achieved with traditional text searching. Pfeifer anticipates that Intelligize content will be used to enhance existing Lexis products such as Lexis Practice Advisor and Lexis for Microsoft Office. Pfeifer also described how Lexis Search Advantage  and Intelligize could be combined to enhance internal firm document  research using "clause level analysis." This feature  would enable firms to analyze their own deal documents and compare documents and clauses with peer data sets. This functionality would have an application both in drafting and deal strategy.

According to  Todd Hicks, Intelligize had other suitors, but chose Lexis because of the company's commitment to letting Intelligize remain a stand alone company while making Lexis content and technology available for product enhancements. Hicks anticipates that as a Lexis subsidiary they  can accelerate  the product enhancement pipeline. Hicks indicated that product enhancements are likely to focus on improving drafting tools, expanding regulatory products. Since Intelligize recently  launched an exempt offerings module, Hicks indicated that they would explore creating an international exempt offerings module which would include offerings from non-US stock exchanges.

Like many of my colleagues, I feel a twinge of sadness as I watch the arc of another small startup move from  scrappy innovator to hot property for acquisition. At least we can look back at how Lexis has handled, Securities Mosaic,  MLex, Law360 and Lex Machina -- to see that those companies and products have retained their identities while expanding content and functionality under the Lexis umbrella.

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