Pre-Paid Legal Services Inc. has provided families and small businesses with access to quality legal services for the past 40 years through a network marketing distribution channel. The company has more than 1.4 million members (customers) and serves members in all 50 states, Washington D.C. and four provinces in Canada through its partnerships with 40 law firms across North America and with Kroll Background America Inc.
When Direct Selling News interviewed founder Harland Stonecipher three years ago, he felt certain the company had opportunity for vast growth. Stonecipher commented, “We haven’t even scratched the surface [of this market.] We haven’t even scratched the scratch.”
MidOcean Partners, a leading private equity firm in New York, completely agrees with Stonecipher, and cemented that agreement by acquiring the legal services firm for $66.50 per share in a cash transaction valued at approximately $650 million.
Pre-Paid Legal adopted the merger agreement, dated Jan. 30, and the transaction was approved by Pre-Paid’s stockholders at a special meeting held on June 21. As a result, Pre-Paid Legal will now become a privately held company and have its common stock removed from the New York Stock Exchange.
“From the beginning, our mission has been to provide affordable access to a full suite of legal services to families and small businesses and also offer a unique business opportunity,” said Stonecipher. “I’m confident that under the leadership of MidOcean Partners, Pre-Paid Legal has an even brighter, more prosperous future ahead.”
MidOcean Partners specializes in middle market investments in the United States and Europe, investing in high-quality companies with stable market positions. Pre-Paid Legal not only satisfied this requirement, but also a strict customer satisfaction test—MidOcean Associate Noah Rabinsky said his mother is a Pre-Paid Legal representative, and both her and her son have used the services and are happy with the results. “I’ve had personal experience with Pre-Paid Legal,” said Rabinsky. “I’m a satisfied customer.”
With a stellar internal recommendation, the firm “started kicking tires,” according to Frank Schiff, Managing Director at MidOcean. “The value proposition was interesting. Could you really get access to quality legal services for about $300 a year? It sounded a bit too good to be true, but this proposition is what interested us, and is ultimately why we bought the company.”
Schiff added, “We believe the company’s beneficial and unique service offering has been underappreciated in the marketplace and we look forward to combining our strong operating resources with Pre-Paid Legal’s already strong management team and field personnel to drive the long-term growth of the company.” Schiff, echoing Stonecipher’s earlier vision, said, “We’re scalable—we think there’s a remarkable growth opportunity.”
MidOcean has appointed Rip Mason as CEO of the company. Mason was formerly an executive with another network marketing business and brought in some of his former colleagues, including Alan Fearnley (President and Chief Commercial Officer) and Joaquim Simoes (Chief Information Officer) to supplement the existing management team. Mason has been on the road for the last six months, attending field events and ensuring associates that the factors important to them are not changing with this transition.
“The compensation plan, the quality of legal services we provide and our commitment to serving our customers have not changed,” said Mason. “We are very satisfied we have best-in-class service, both in our legal representatives and in our customer service. The product proposition won’t change.”
Mason and the MidOcean team believe the future holds remarkable opportunities in the Hispanic marketplace, on the Web, and in expanding the group sales component to corporate accounts. Mason says he is particularly delighted to be working with the “most outstanding field of leadership in the network marketing industry.” The team is looking forward to their upcoming National Conference in September, where the field will have an opportunity to share success stories and announcements will be made about new initiatives.