Private equity investment in intellectual property firms is gaining traction, and a recent announcement by two European firms bears further witness to that trend.
Last month, France-headquartered Ipsilon and Dutch firm NLO announced that they had entered into a strategic partnership backed by Waterland Private Equity.
The firms said in a joint press statement at the time that they wanted to create the number one IP firm in Europe.
While the parties are still easing into the integration and have yet to decide how they’ll operate under a single brand, they are clear on what they want to achieve through the merger and PE investment.
As Ipsilon’s CEO Valérie Feray puts it: “Together with NLO, we are building the future of IP in Europe.”
Feray’s assertion came during an exclusive interview with Managing IP earlier this week, in which NLO’s co-managing partner, Jeroen Cornelis, also featured.
Both leaders discussed why NLO and Ipsilon are the perfect partners for each other, the role Waterland will play at the combined firm, and their expansion plans.
‘True match’
Even before the merger, which created a team of 400 professionals in offices across seven countries including France, the Netherlands, Belgium, Germany, and Luxembourg, Ipsilon and NLO had each built a strong reputation across Europe.
Managing IP’s accreditation title IP STARS ranks NLO in tier one for patent prosecution in the Netherlands and Belgium, while Ipsilon is listed among the top firms in patent and trademark prosecution in France.
In response to what led to the merger, Cornelis says that after reassessing its strategy post-COVID, NLO had set the goal to become the top IP firm in Europe and was looking for ways to expand.
“Internally, we were fully convinced that we could do it alone, but we decided that it would be better to partner with another firm in order to grow more rapidly and reach our goal faster,” he explains.
However, he notes that finding “a true match” can be very difficult in the IP world, adding: “We are extremely enthusiastic because we see an alignment [with Ipsilon] not only in vision but also in culture and values.”
Return on investment
As both firms work on integrating their services and combining their expertise, an added advantage will be the financial backing from Waterland.
While Waterland’s exact share in the business remains unknown, Feray tells Managing IP that the PE firm owns a minority stake.
NLO and Ipsilon’s deal with Waterland is similar to the approach followed by other European firms that have received external investment, including Rouse and HGF, both of which have sold minority stakes to PE firms in recent years.
Waterland isn’t new to the IP business, however. While it’s the first time NLO will work alongside the PE firm, Waterland has been a shareholder in Ipsilon since 2022.
With the deal, the combined entity has secured additional investment from Waterland.
Cornelis stresses that despite investing significant capital into the business, the PE firm won’t get involved in the day-to-day management.
The new firm plans to create an executive committee comprising representatives from the group offices at the country level to oversee all strategic and operational issues.
However, Cornelis notes that Waterland will help take a call on expansion decisions.
“Waterland will obviously have a say in decisions involving further developments of the firm including additional firms joining the group and potential targets, as it is bringing in the financial means to help us expand.”
Many industry sources have voiced their apprehensions about PE investment in law firms in the past because they believe external capital often comes at a cost, such as a push for efficiency that could put additional pressure on the workforce.
However, Feray highlights that Waterland has chosen to invest in the Ipsilon group and that Ipsilon has chosen to join forces with NLO because they already have “fairly efficient firms”.
She adds: “Of course, we can always be more efficient, but the idea is not that much to gain on efficiency, but to have that top-line growth and to grow our clients and develop the services we can offer to them.”
She further explains how the firm plans to meet that goal: “This means not just offering traditional IP services – we want to build around traditional services with a number of other services that can help us add more value to our clients.”
The new firm certainly has the means to meet that goal, given that the partners at NLO and Ipsilon have also made significant additional investments in the combined entity on top of the capital provided by Waterland.
Feray says they plan to invest the capital in two major directions – technology and expansion.
On the tech front, the group plans to implement artificial intelligence more broadly across its offices as well as to build a client portal that would enable clients to access their data 24/7.
Broader horizons
In terms of expanding its presence, Feray notes that the group wants to strategically focus on countries that could help reach its goal of being the number one player in Europe.
Two countries that stand out to the leadership team are the UK and Germany, because of the maturity of those IP markets and because both nations boast strong economies.
While the group already operates in Germany, it plans to expand its footprint further in the coming months.
Cornelis explains the reason behind targeting Germany: “On one hand, it's a very strong domestic market, and on the other, it’s also very important for clients from abroad, mainly from Asia and the US.
“That makes Germany possibly the most important country in Europe not only in size but also in terms of the maturity of the domestic IP market.”
Noting that the firm also wants to expand its footprint in Asia and secure more clients there, he adds: “Having a strong presence in Germany helps a lot with that.”
Europe is undoubtedly one of the most important IP regions in the world.
Feray believes protecting innovation in Europe will become increasingly crucial as companies in the region try to protect their economic interests amid the US’s ongoing geopolitical conflict with other countries.
At this crucial juncture for the continent, the stars seem to have aligned for both Ipsilon and NLO as they aim to reach more markets and more clients.
As Feray puts it: “We believe we are in the right place at the right time with the right people.”
Let’s see if she’s proven right.
