Online legal service buys Prentice Hall software

Abstract

Information America Inc., a small online legal service, is in the process of acquiring Prentice Hall Professional Software, once the industry leader in practice management and tax software. Information America, with pro forma revenue of $25 million for 1992, will be taking over the Prentice Hall Legal and Financial Services, Prentice Hall Legal Practice Management, and Prentice Hall Professional Software, which had an estimated $83 million in revenue for 1993.

ATLANTA--Prentice Hall Professional Software, once the industry leader in practice management and tax software, is in the process of being sold to Information America, a smaller online legal service.

Information America has agreed to purchase three Prentice Hall units from Paramount Publishing, an arm of conglomerate Paramount Communications. The deal is expected to be completed in the fourth quarter.

Information America, with pro forma revenue of $25 million for 1992 following an acquisition earlier this year, will be taking over the Prentice Hall Legal and Financial Services, Prentice Hall Legal Practice Management and Prentice Hall Professional Software, which had an estimated $83 million in revenue for 1993.

The deal will give Paramount 49 percent ownership of Information America stock with the ability to increase that to 60 percent. However, Information America Chairman Burton Goldstein Jr. said Paramount cannot take control of Information America's board for three and a half years.

Sources familiar with the software operations believe Information America, whose major business has been providing online services for law firms, did not want the software business, but that Paramount refused to sell Prentice Hall piecemeal.

Revenue for Professional Software sank from just over $31 million in 1988 to around $20 million in 1992, according to sources familiar with the operations. Sources estimate 75 percent of revenue comes from sale of Software 1040, its tax preparation package.

The company once dominated the market when minicomputers ruled the accounting and tax office. But Prentice Hall failed to keep up with developments in PC software, observers said.

"It was the leader in all area in systems," said Jim Metzler, of Gaines, Emhof, Metzler and Kriner in Buffalo, N.Y. Metzler's firm has used Prentice Hall products for practice management and tax preparation. But he expressed disappointment in the company's direction in technology.

"The company is crying for development dollars," said Metzler. "It's pretty dismal for CPAs unless they (Prentice Hall) show some commitment real fast."

Last year, Prentice Hall tried to keep up by launching an ambitious suite of products under the Office Advantage name. But the company admitted the software simply didn't work and was forced to withdraw the new Practice Advantage package, which has been reworked and rereleased recently.

The company had four presidents since 1988 and in the last four months has had two rounds oflayoffs. Sixteen people, including the vice president of sales, were laid off in April. Late in June, 10 workers in product development lost their jobs.