Over the past year, the e-discovery market has been defined by a flurry of M&A activity. But not all players in the market want to march to the same tune. E-discovery and forensics provider HaystackID recently announced a fairly rare move: a recapitalization that allows it to remain independent while growing the company.

The recapitalization, which was completed in October 2017, was funded by a group of mostly undisclosed private investors and lenders, though the Chicago-based Knox Capital was named as one of the lenders and new shareholders. Under the recapitalization, Kevin Glass, president and chief executive officer, will remain the majority shareholder and owner of the company.

Alex Gregor, founder and partner of Knox Capital, said HaystackID was a good investment because it “has carved out a great niche for white glove service” in the e-discovery space, and “there is always going to be room in this industry for a high level of customer service.”

He added that HaystackID has an opportunity to excel in the market segment serving “certain types of customers with complex issues that demand a higher level of service, and that's where Haystack is going to stay. And as long as you stay there, there is a much higher value proposition if you look at scaling, doubling or tripling your size.”

But recapitalization wasn't HaystackID's first plan. In a bid to expand its services to include e-discovery review, HaystackID initially “explored a complete buy out” from larger competitors looking for acquisitions, Glass noted.  But in the end, “we kept coming back to, pound for pound we may be smaller, but we're a better company.”

HaystackID came out of acquisition discussions believing it had better clients, and handled more newsworthy cases, than most of its larger competitors. What's more, when HaystackID approached its clients to ask whether there was interest in the company managing their e-discovery review, many were receptive.

The company wasted little time getting its e-discovery review operations up and running. The service was launched “a couple months ago,” Glass said, noting that so far, HaystackID has “gotten large projects right out of the gate” and has been able to steadily build out its e-discovery review team and infrastructure.

With its managed review service, he added, the company looks to be receptive to how its client want review, whether through the deployment of technology, extra in-house staffing, or outsourced operations.

With the addition of e-discovery review, HaystackID joins the ranks of  “end-to-end” e-discovery providers able to offer services that cover the full Electronic Discovery Reference Model (EDRM) cycle.

Glass said that such services are in high demand in the e-discovery space because clients prefer to have a single team throughout an entire e-discovery project to help direct efforts and “keep costs down.”

In addition to the expansion of its services, HaystackID has also used the recapitalization as an opportunity to instill a culture of self-ownership within the company. Glass plans to make HaystackID “an employee owned company,” by creating “equity plan for employees” that will roll out in the near future. The idea, he said, was to make sure employees feel they are a part of the company, and to attract new talent to HaystackID.