J U L Y E-Discovery Market Map. Shea & Company

Transcription

1 J U L Y E-Discovery Market Map Shea & Company

2 Agenda E-Discovery Market Trends & Landscape Shea & Company Firm Overview 1

3 E-Discovery Market Trends & Landscape Market Trends & Implications Trends Regulatory Requirements Amount and Variety of Data Litigation Volume Implications Legal departments are driving efforts to create systems that ensure full compliance with regulatory requirements around E-Discovery due to increased regulation regarding digital record management from the Sarbanes-Oxley Act in 2002, amendments to the Federal Rules of Civil Procedure (FRCP) in 2006 and additional legislation coming out of the 2008 financial crisis E-Discovery is now being treated as a repeatable process, rather than a one-off event unique to each litigation scenario, particularly in highly-litigious industries (banking, insurance, oil & gas, government, pharmaceuticals, life sciences and telecom); there has been a clear shift within the enterprise toward proactive information governance and an effort to bring identification, preservation and collection technologies in-house Prior to the advent of digital technologies, the scope of discovery was relatively straightforward, including physical business documents With the uptake of computers, this definition was expanded to include electronically stored information Despite mainstream adoption, instant messaging, social networking content and other means of digital communication remained a grey area for quite some time, until the FRCP was amended in 2006 to explicitly include electronically stored information These digital technologies are creating massive amounts of discoverable information, driving an increased need for E-Discovery solutions SaaS Delivery Model Both the quantity of lawsuits and the size of damages awarded by courts have been steadily increasing, raising the stakes for corporations and subjecting corporate data to increased scrutiny; this is creating demand for data processing, review and production as part of the internal legal process Organizations in the most litigious sectors have been increasing their internal spending on software solutions to proactively manage costs and prepare for litigation responses, and are decreasing spend on outsourced E-Discovery services SaaS applications provide a lower initial cost than the traditional on-premise software, and offer flexibility when dealing with short timelines and large datasets; additionally in-house legal departments can make a quick buying decision without the need to go through their IT Department, which historically has resulted in lengthy vendor selection processes The SaaS model has become the main method to deliver processing, review, analysis and production functionality in the E-Discovery process 2

4 E-Discovery Market Trends & Landscape E-Discovery Market Segmentation and Growth Total Software Revenue ($ millions) $3,500 The E-Discovery market is expected to grow at a healthy 15% CAGR, down slightly from the historic growth rates of 25% (prior to the budget-tightening that came with the 2008 financial crisis) The E-Discovery market has also become more competitive, with vendors competing on price and bundled discountsoverlapping functionality which pushes down growth; however, this is overcome by the increase in quantity of data which drives overall market growth $3,000 $2,500 $2,000 $1,500 $1,000 $500 $1,441 $1,668 $1,926 $2,217 $2,549 $2,927 $ Vendor Revenue by E-Discovery Segment, 2007 and 2011 The split of vendor revenue by E-Discovery segment has not changed significantly in the past few years, with the market continuing to be dominated by the Processing, Review & Analysis and the Information Management segments Spending on Information Management is a proactive investment for organizations, while Processing, Review & Analysis spending typically is in response to a specific discovery request Vendors have been shifting towards providing more broad E- Discovery suites Identification; Preservation; Collection and; Processing, Review & Analysis are more often being bundled together from a single provider 2007 Information Management 2011 Identification Preservation & Collection Processing, Review & Analysis Production 0% 10% 20% 30% 40% 50% 60% Source: Gartner,

5 E-Discovery Market Trends & Landscape E-Discovery Reference Model E-Discovery Reference Model Predominantly On-Premises Delivered both as an on-premises and cloud-based offering Preservation Processing Discrete from, but tangential to, E-Discovery space Information Management Identification Review Production Presentation Collection Traditionally delivered as an onpremises solution, however e- mail archiving systems are frequently delivered as cloudbased solutions Analysis Predominantly Cloud-Based and SaaS Volume Relevance Vendors often address more than one step of the E-Discovery Reference Model (EDRM), and there is an increasing demand for software that addresses the first 4-5 steps of EDRM 4

6 E-Discovery Market Trends & Landscape E-Discovery Market Landscape Processing, Review & Analysis; Early Case Assessment andor Attorney Document Review Identification, Preservation, Collection & Processing Information Management Enterprise Information Archiving & Management Enterprise Content & Records Management 5

7 E-Discovery Market Trends & Landscape E-Discovery Market Leaders Processing, Review & Analysis; Early Case Assessment andor Attorney Document Review Identification, Preservation, Collection & Processing Information Management Enterprise Information Archiving & Management Enterprise Content & Records Management 6

8 Smaller Scale Larger E-Discovery Market Trends & Landscape Market Divided Between Software & Service Providers = Acquired Operating Subsidiary Software Solutions Market Solution Services Consulting 7

9 E-Discovery Market Trends & Landscape E-Discovery Market Consolidation E-Discovery & Content Management M&A Activity While a mature industry, the E-Discovery market remains fragmented, with many best-of-breed point solution vendors Large vendors have been shifting towards providing suite solutions, with Identification, Preservation, Collection & Processing and Review & Analysis bundled into a single offering We expect M&A in the E-Discovery space to accelerate through 2015 as these established vendors look to expand their offerings and grow their existing customer bases 25 # of Transactions YTD Source: The 451 Group Selected E-Discovery & Content Management Transactions Date Target Acquirer Amount EV Rev Bridgeway Mitratech Kooby Inventus FLEX Discovery HayStackID Iris Data Systems Eqiq Systems $ x Merrill Corporation (assets) DTI Unified OS Inventus Platinum Legal Group PwC Canada Equivio Microsoft Xact Data Discovery Clearview Capital Turnstone LDiscovery Litsupport Information Mgmt Group $ RenewData LDiscovery $43[a] 1.4x Hudson Legal e-discovery DTI $23 0.4x Evidence Exchange AlixPartners SDS D Falcon Discovery DTI Discovery Services etera Consulting Flash Data Solutions LDiscovery Responsive Data Solutions Advanced Discovery Bookpad Yahoo! Docuspace Technologies RCS Capital Doxim Strattam Capital Results Engineering Konica Minolta DirectRestore (assets) Anxient Legal Oasis Prosperoware Eclipse Hardware Capita plc DTI OMERS Private Equity $900 [a] Advanced Discovery Trivest Partners Semantria Lexalytics RJS Software HelpSystems Commonwealth Legal Ricoh Canada TeamConnect Legal Mitratech AccessData Group OmniVere $19[a] Cernam Ltd. Daybreak Applied Discovery DTI Crossfield Data Services InferX DataClues Precision Discovery TERIS (assets) Inventus TechLaw Solutions Schiefelbein Analytics Handshake Software OneView Inventus Clearlake Capital In Demand Document Xact Data Discovery Quantum Discovery Preferred Imaging TELUS Communications Digital Wyzdom Network Designs BitSec Global Forensics Vision Critical DiscoverText - - [a] Source: The 451 Group 8

10 Agenda E-Discovery Market Trends & Landscape Shea & Company Firm Overview 9

11 Shea & Company Firm Overview Introduction to Shea & Company People Industry Expertise Process Excellence Advisory Services and Selected Transactions Mergers & Acquisitions Buy-side and sell-side M&A advisory Selected Transactions Shea & Company has advised on billions of dollars of software M&A Divestitures Restructuring has been acquired by has been acquired by has received an investment from has acquired Corporate Strategy Shea & Company served as the exclusive financial advisor to MRI Software Shea & Company served as the exclusive financial advisor to Bronto Financial advisor to VersionOne Financial advisor to TA Associates Capital structure optimization Corporate development advisory Fairness opinions has received an investment from has received an investment from Series D Convertible Preferred Stock has been acquired by Financial advisor to Ping Identity Financial advisor to Mimecast Financial advisor to PSS Systems Financial advisor to Stratify Capital Raising Later-stage venture and growth equity IPO advisory Recapitalizations has been acquired by has been acquired by has been acquired by has been acquired by Financial advisor to Platform Computing Financial advisor to Amici Financial advisor to SPL WorldGroup Financial advisor to ProfitLogic 10

12 Shea & Company Firm Overview Introduction to Shea & Company Focused on Clients, Impacting Their Success, Measured by Results Our Clients are the emerging leaders in rapidly growing and highly turbulent markets, and established organizations with mature operational and capital structures in the software industry each faces robust corporate development opportunities and the interplay of capital investment, and value creation versus value realization Shea & Company is focused on Client results We achieve superior outcomes for our Clients on valuation and terms in competitive and sole-bidder situations, from both strategic and financial acquirers 100% of Shea & Company transactions have closed from the Term Sheet stage, and with terms consistently better than industry averages From inception in 2005, our team has advised on over $2 billion of completed transactions, with Clients on both coasts of the U.S., in Canada and in Europe, as M&A advisor in both sell-side and buy-side capacity People Industry Expertise Process Excellence Our Team embodies a level of integrity, intensity and transaction instinct that is unsurpassed and the foundation of our uncompromising focus on Clients and results The passion of our professionals is working with mid-market technology companies no other Firm can bring comparable talent, senior resources and relevant experience to bear for these Clients We maintain and invest in relationships with the most important companies in technology, and most successful technology investors, to provide access to relevant senior executives, insight into their strategies, and context for their negotiation tactics We bring expert perspective and a deep understanding of the software industry to assess the trajectory of technologies and market segments to most effectively position and value our Clients Our senior leaders have an average of over 15 years working on transactions for execution-focused bulge bracket banks and the knowledge-focused advisory boutiques Firm-wide focus on rigorous preparation and driving disciplined, thoughtful and effective process we deliver the resources of the Firm to each mandate, ensuring best-in-class execution 11

13 Shea & Company Firm Overview Shea & Company Senior Banking Team Shea & Company principals have in aggregate advised on over $50 billion of completed M&A transactions and financings Michael S. Barker Managing Director Michael joined Shea & Company in 2012 and opened the Firm s San Francisco office. He has nearly 20 years of experience in investment banking and software, and prior to joining Shea & Company, was a Managing Director and Head of the San Francisco office for the Morgan Keegan Technology Group, which Michael joined via Morgan Keegan s acquisition of Revolution Partners. Throughout his career, Michael has worked on transactions with clients such as Appirio, Apple, Ascend, ELT, Informix, Intuit, Involver, KLA-Tencor, Lacoon, LookSmart, MRI, Netscape, Nortel, PLATINUM, Plaxo, PureAtria, Stratify, Surgient, Symyx, TopTier, Trapeze, Trigo, VLSI, VMIX, Wavelink, Webify and Welocalize, including the $3.4 billion sale of PLATINUM to Computer Associates, the largest software acquisition at the time. Michael had previously served as an executive in IBM s WebSphere Product Center division, which he joined through IBM s acquisition of Trigo Technologies, a Product Information Management Software company Michael helped build to profitability, 150 employees and a $40+ million revenue run-rate. Prior to IBM, he was with Bluevector s software practice where he led Bluevector's investment in TopTier and subsequent sale to SAP for $400 million. Michael has also worked in the Technology M&A practices of Credit Suisse, Deutsche Morgan Grenfell and Morgan Stanley. He received a B.A. in Political Economy and a B.S. in Business Administration from the University of California at Berkeley. Michael Shea Founder & Managing Director For over 18 years, Michael has worked with emerging and established technology companies as an investment banker, an equity research analyst and a trusted advisor. He has spent his career addressing the corporate finance and strategy issues of clients in infrastructure, IT security, application and technical software. Michael has advised clients in over 70 public and private financings, mergers and acquisitions. Immediately prior to founding Shea & Company, Michael served as Vice President and Head of Infrastructure Software for JPMorgan and a predecessor organization, Hambrecht & Quist, where he spent six years based in San Francisco with global coverage responsibility. During his tenure, the team was successful in working with leading companies including Adobe, BMC, CA, Cisco, Citrix, EDS, EMC, Fujitsu, HP, IBM, Mercury, Microsoft, NetApp, NetIQ, NetScreen, Network AssociatesMcAfee, Oracle, Quest, Sterling Software, Symantec, UGS, Veritas, VMware and Wind River among others. Prior to H&Q, Michael was a research analyst at BT Alex. Brown as co-author and key contact for Enterprise Software research. The coverage universe included business application, infrastructure and systems management software vendors. Michael began his banking career in the Technology Banking Group of First Albany Corporation in Boston. Before that, he spent six years as an architect and draftsman on a wide range of educational, institutional, corporate, residential and international projects. Peter Falvey Managing Director Peter has worked with software and technology companies across multiple industries for over 17 years as an investment banker. Prior to Shea & Company, Peter co-founded Revolution Partners in 2001, one of the most successful technology banking boutiques of the last decade. He also formerly ran East Coast software and e-commerce investment banking for Robertson Stephens. Peter was named to Investor Dealers Digest s and Boston Business Journal s 40 Under 40 lists, and has been quoted extensively in the press in publications such as The Wall Street Journal, The New York Times and CNBC. Peter holds an MBA from the Wharton School and received a BA with honors from Hamilton College. 12

14 People Industry Expertise Process Excellence Boston San Francisco Shea & Company, LLC provides independent financial advice on mergers, acquisitions, financial restructurings, private capital raising and similar corporate finance matters. Shea & Company is not a retail brokerdealer. The firm does not conduct underwriting activities, provide research or analyst reports or solicit or carry accounts for, or offer or sell securities products to retail customers. Shea & Company is regulated by the Financial Industry Regulatory Authority, Inc. ( FINRA ) as a FINRA Member Firm. The information and services provided in this presentation are not provided to and may not be used by any person or entity in any jurisdiction where the provision or use thereof would be contrary to applicable laws, rules or regulations of any governmental authority or regulatory or self-regulatory organization or where Shea & Company is not authorized to provide such information or services.