Migrated from eDJGroupInc.com. Author: Greg Buckles. Published: 2017-08-06 20:00:00Format, images and links may no longer function correctly.
The consolidation of the eDiscovery niche market continues and venture capital money seems to be gushing. If you back track some of recent acquisitions (Discovia by Lighthouse eDiscovery and inData by Ipro), you will notice that they both took VC money shortly before the announcements.
OpenText has a long history of acquiring software with a strongly established customer base. In this case OpenText put down $240M for Guidance. That is a roughly 2X multiple of Guidance’s $115M expected revenue (operating at a net loss). That is well below the target 4-6X revenue multiple that most technology firms seek, but Guidance Software is not your typical startup. Guidance was one of the first eDiscovery companies to go public. It has struggled to redefine its brand and products in the evolving market. I see the OpenText acquisition as a lifeline for a public company operating at a loss with an identity crisis. Now we get to see if OpenText can actually integrate the Guidance portfolio and transition customers to a larger solution platform. There seems to be some push back from the Guidance BoD regarding the valuation, but I don’t see that having legs beyond the obligatory shareholder lawsuit that will follow the transaction.
The Ipro acquisition of inData is a lot more interesting to me. From the first versions of the outdated EDRM diagram, practitioners have craved for a true ‘end-to-end’ eDiscovery platform that would take them from preservation through presentation. I know that my old Summation friends will email me to remind me that iBlaze did it first, but not with today’s volume and diversity of ESI. Trial Director is the leading trial presentation software. Ipro could change the market if they can convert even a small portion of that massive customer base with an attractive alternative to Relativity’s pricing models. And yes, I do believe that licensing/pricing models are more important than actual product functionality.
Attending ILTA and want to chat? I will be making a fast pass on Tuesday-Wednesday, so reach out!
Stay skeptical my friends!
Greg Buckles wants your feedback, questions or project inquiries at Greg@eDJGroupInc.com. Contact him directly for a free 15 minute ‘Good Karma’ call. He solves problems and creates eDiscovery solutions for enterprise and law firm clients. His active research topics include analytics, mobile device discovery, the discovery impact of the cloud, Microsoft’s Office 365/2013 eDiscovery Center and multi-matter discovery. Recent consulting engagements include managing preservation during enterprise migrations, legacy tape eliminations, retention enablement and many more.
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