mergers and acquisitions

 

As the e-discovery industry continues to consolidate, two major players are combining forces to better tackle e-discovery and risk management problems globally.

On March 21, Consilio and Advanced Discovery announced that the two companies have combined forces, creating a global company that will have 2,500 employees, 14 data centers and 23 document review facilities in 11 countries.

In addition, the combined company announced a new partnership with GI Partners, a San Francisco-based private equity firm. GI Partners will hold a majority stake in the combined company, with current investors Shamrock Capital Advisors and Trivest Partners exiting. Financial details of that transaction have not been announced.

For the combined company, Consilio CEO Andy Macdonald will continue in the chief executive officer role, while Advanced Discovery CEO Jim Burke will join the company's board as a director. The full transaction is expected to close in Q2 2018, with integration of the two companies' systems and processes to occur after that time.

Speaking with Legaltech News after the public announcement, Macdonald said that the combined company has not yet decided on its final name, but will likely have one by the official close of the deal. He also noted that he expects no short-term staffing changes as a result of the deal, as “we're going to need all hands on deck to manage growth moving forward.”

For customers, though, he does expect some long-term changes—positive ones, as customers have more options at their disposal. Historically, Advanced Discovery and Consilio have had similar operations, with both focusing on global e-discovery matters. Combined, the company touts a “full solution suite [that] will span information governance, risk management, e-discovery and document and contract review.”

While Consilio largely focused on global consulting and service delivery, Advanced Discovery has focused heavily on the software and document review side of the business, particularly in the United States. Speaking with Legaltech News, both Macdonald and Burke pointed to those complementary offerings as a major driver for the deal, with Macdonald noting that the two companies have just 5 percent overlap in their revenue streams.

“The marriage with Consilio made perfect sense,” Burke added. “Our two businesses are highly complementary, with Consilio having a really broad international footprint, and Advanced Discovery having capabilities extending into risk management.”

Especially in the current e-discovery climate, Burke said, it was important to Advanced Discovery to be able to handle increasing volumes of data sources and ESI, keep on top of client needs through an M&A strategy that feeds inorganic growth, and respond to increasing globalization and cross-border growth. He explained, “The merger of these two companies considers each of them.”

Macdonald added that the current corporate purchasing structure also adds to the need for consolidation: “The buying decision has made its way into a full corporate procurement cycle where there are expectations around data security, data privacy, capital requirements, and financial stability requirements. It's becoming more extensive to build a platform to serve some of those organizations because of these needs; therefore, consolidation just makes sense from a capital investment standpoint. It's becoming harder and harder to make it through the procurement process without the type of scaled infrastructure that these businesses can now provide.”

Moving forward, Macdonald said the combined company will continue to pursue international expansion with the increased capital coming from GI Partners, particularly in areas of high growth like continental Europe, China, and South America. “All areas where our clients have operations and have needs, either because of local regulatory authorities and litigation, or because of more global types of regulatory needs.”

He also added that as Consilio and Advanced Discovery both were experiencing double-digit organic growth prior to today's announcement, he expects that trend to continue.