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PRIVATE AND CONFIDENTIAL TECHNOLOGY FOCUS. BROAD REACH. OPTIMAL RESULTS.
E-discovery Overview
Peter Falvey
Managing Director
P. 1.617.598.0437
Jason Myler
Managing Director
P. 1.617.598.0438
Jeffrey Cook
Vice President
P. 1.617.598.0439
2
e-Discovery Will Continue to be an Active Sector in 2013
Strong growth outlook: e-Discovery growth is expected to accelerate (CAGR of 25%) over the
next few years as legal/compliance/regulatory issues increase in complexity and as the amount
of electronically stored information (ESI) grows over 60% per year
Market will consolidate: The market continues to be highly fragmented and localized, but end-
users are demanding more complete and robust solutions
− Large enterprise software vendors looking to acquire small e-Discovery point solutions to
build solution sets that span the entire EDRM lifecycle
− The handful of strong, independent e-Discovery companies will have the opportunity to
consolidate subscale local competitors
Pricing free fall has slowed: Although price pressure remains, companies and law firms have
shown will pay for a combination of good technology and superior service
We expect the level of acquisition activity to remain strong in the coming year as
consolidation continues to define the industry
3
Sector Market Map - Market Divided Between Software & Service Providers
Services / Consulting Software Solutions
= Acquired / Operating Subsidiary
Sc
ale
S
ma
lle
r L
arg
er
Market Solution
4
$976
$1,152
$1,405
$1,784
$2,355
$0
$500
$1,000
$1,500
$2,000
$2,500
2012 2013 2014 2015 2016
Revenue ($MM)
Attractive Growth Prospects Show No Sign of Receding
Attractive underlying growth drivers will continue
to generate transaction activity in the e-Discovery market
e-DISCOVERY MARKET SIZE
Approximately $1 billion market - projected
to grow ~25% annually
Legal / compliance areas becoming more
important areas for IT spending
− Increase in high profile civil litigation
cases in recent years
Growth of record management and risk
mitigation activities across industries
− According to IDC, the amount of
electronically stored information (ESI)
is growing 62% per year
Growing use of enterprise social software
in the work environment
KEY DRIVERS
Source: Radicati Group
24.6% CAGR
5
A Market Highlighted by Point Solutions in the EDRM...
The structure of the electronic discovery reference model created an environment of
companies focused on providing best-of-breed point solutions
ELEMENTS OF THE ELECTRONIC DISCOVERY REFERENCE MODEL
Internal audience (IT, legal, compliance)
Focus is on information management
Data resides inside the firewall
Typically served by on-premise software
Internal or external audience (legal, outside counsel)
Focus is on risk mitigation and litigation support
Data resides outside the firewall
Typically served by hosted or cloud-based software
Source: EDRM, CaseCentral
The division in the EDRM (audience, primary use case, software needs, etc.) forced software and service
providers to take a siloed approach and provide targeted offerings, leading to a market ripe for consolidation
Information
Management Identification
Preservation
Collection
Analysis
Review
Processing
Production Presentation
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...is Shifting Dramatically, as Consolidation is Underway
e-Discovery point-solutions across the EDRM are attractive targets to both service
providers as well as large enterprise software vendors
e-Discovery Suites
Service Providers
Attempting to create one-stop shops with
proprietary technology for full EDRM
Acquiring pure-play e-Discovery vendors
Full EDRM solution providers
Typically leverage software from technology
providers at different stages of the EDRM
Left side of EDRM Right Side of EDRM
Significantly fewer software players on this side of
EDRM
− Information management
− Identification
− Preservation and collection
Review stage is most active stage / consolidating fastest
− Processing, review and analysis
− Production
− Presentation
7
Users looking for faster, cheaper, more accurate solutions
E-mail is no longer the e-Discovery priority
Movement to cloud-based discovery throughout the EDRM
Big data / volume of ESI forcing need for more storage
Complexity given strict regulations / compliance
Increase in mobile device use
New Market Opportunity Emerging for Specialized Solutions
Emerging trends in the e-Discovery space have created a market opportunity for a wave
of new companies who provide specialized solutions not yet adopted by large players
BIG DATA PREDICTIVE CODING SOCIAL MEDIA
DISCOVERY MOBILE DISCOVERY
Key trends emerging
in e-Discovery
Big data collection is
becoming an issue due
to ESI almost doubling
every year
Increase in unstructured
data
Big data archiving
companies will be key
players
New technology
disrupting the review
stage of EDRM
Replacing manual review
as it is faster, more
accurate and cheaper
Becoming widely
adopted by vendors
Social networks are a
significant source of
information
Increased use of social
media in enterprises
creating a demand for
new e-Discovery
products
MDM and BYOD trends
are spurring the use of
mobile device use with
corporate applications /
data
Mobile forensics
companies will be next
wave of entrants in the
e-Discovery market
8
Large Players are Assembling Portfolios Through Acquisition
Source: Public filings
Acquirer
Large players in the space have been responding to the demand for more complete
e-Discovery functionality by augmenting solution sets through acquisition
Target Date
Dec 2012
Nov 2012
Oct 2012
Jul 2012
Data Forté Jun 2012
Mar 2012
Feb 2012
Jan 2012
Dec 2011
Oct 2011
Acquirer
n
Target Date
Aug 2011
May 2011
May 2011
Apr 2011
Oct 2010
Sep 2010
Jul 2010
Jun 2010
Jun 2010
Feb 2010
e-Discovery Assets
9
Falvey Partners Overview
FOCUS SELECT TRANSACTION EXPERIENCE
December 2011
Has acquired
July 2012
Has been
acquired by
September 2011
Series D
Convertible
Preferred Stock
Led by
September 2012
Has been
acquired by
A portfolio company of
July 2011
Has been acquired
by a portfolio
company of
April 2011
Has been
acquired by
July 2011
Has been
acquired by
February 2011
Growth equity
investment from
July 2011
Has been
acquired by
March 2011
Has divested
its diagnostic
solutions unit
November 2010
Has received an
investment from
A portfolio company of
October 2010
PGI Notify and Send
platforms acquired by
August 2010
Two divisions have been
acquired by a portfolio
company of
April 2010
Has been
acquired by
August 2010
Series C
Convertible
Preferred Stock
Led by
SERVICES
Sell-side or buy-side M&A
Growth capital raising
Board and corporate advisory
SECTOR
Software / SaaS
Tech-enabled business services
IT services
Internet / digital media
COMPANY TYPE
$50M - $250M in enterprise value
Growing, with established scale
Profitable or near-term path to profitability
Falvey Partners is a leading advisory firm serving
mid-market clients across technology sectors
Founded in 2012 by Peter Falvey and key members of the Morgan Keegan / Revolution Partners team
Falvey Partners professionals have closed dozens of software transactions representing billions of
dollars in transaction value
