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Permira wanted to buy all of LegalZoom

January 7, 2014: 12:12 PM ET

LegalZoom agrees to $200 million private equity deal, but it could have been even bigger.

140107120629-legal-zoom-will-620xaFORTUNE -- Private equity firm Permira yesterday announced that it had invested more than $200 million for a control stake in LegalZoom, the online provider of legal documents and services that had been in registration for an IPO. Neither Permira nor LegalZoom is talking beyond the press release, but we've since learned a bit more about the deal:

1. Permira wanted to buy all of the company (as it did with Ancestry.com), but ran up against resistance from many of the company's existing venture capital backers. That's why the final deal provides sizable equity roll-overs for Polaris Partners, Institutional Venture Partners and Kleiner Perkins Caufield & Byers.

2. The two sides began discussion last July, but the real prompt for this deal appears to have come in late 2012 when Permira took Ancestry.com private for around $1.6 billion. The firm fell in love with the subscription model's operating leverage, and went in search of similar businesses. That led it to LegalZoom, which had not been seeking a buyer. As of right now, approximately 30% of LegalZoom's revenue comes from subscription-related services -- but Permira believes the figure should eventually top 50%.

3. LegalZoom also held talks with at least one other private equity firm about a possible investment.

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Dan Primack
Dan Primack
Senior Editor, Fortune

Dan Primack joined Fortune.com in September 2010 to cover deals and dealmakers, from Wall Street to Sand Hill Road. Previously, Dan was an editor-at-large with Thomson Reuters, where he launched both peHUB.com and the peHUB Wire email service. In a past journalistic life, Dan ran a community paper in Roxbury, Massachusetts. He currently lives just outside of Boston.

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