Epiq Systems, a leading global provider of integrated technology solutions for the legal profession, announced today that the company has signed a definitive agreement to acquire privately-held, Kansas City-based Iris Data Services, the market leading provider of managed services for electronic discovery (eDiscovery). Marks Baughan is pleased to announce its role as exclusive financial advisor to Iris in this transaction. The total consideration for the acquisition is $134 million, subject to certain post-closing adjustments, which would be funded with existing cash and borrowings from Epiq’s credit facility. The acquisition is expected to close on or about April 30, 2015, subject to the satisfaction of closing conditions, be modestly accretive to Epiq’s 2015 results and provide a post-closing tax benefit to Epiq of approximately $23 million.
The Iris acquisition significantly accelerates Epiq’s strategic plan to offer managed services solutions to its existing global client base, while bringing Epiq’s expansive eDiscovery and document review resources to a new client base. Iris President and co-founder Major Baisden will join Epiq as managing director and will continue leading Iris’s operations.
Managed services is an outsourced eDiscovery solution for an entire organization, rather than for a single project. Responding to a growing market need for price certainty and self-service, Iris created an innovative eDiscovery managed services offering. Iris’s platform, one of the first of its kind, delivers best of breed third-party technology integrated with its proprietary workflow, storage, security and evidence management software.
Managed services engagements typically involve multi-year contracts and recurring revenue streams. With over 22 multi-year deals signed in the last 12 months alone, Iris has established itself as the leader in eDiscovery managed services. The swift rise in Iris’s operating revenue and adjusted EBITDA is evidence the legal industry is embracing the managed services model. Iris’s operating revenue grew 52% to $38 million in 2014 from $25 million in 2013, while 2014 adjusted EBITDA grew 42% to $8.2 million compared to $5.8 million in 2013.
“The acquisition of Iris is a significant milestone in our growth strategy. Iris complements our core transactional eDiscovery business and supplements it with an impressive team and a range of new capabilities. We expect this transaction to yield numerous cross-selling opportunities between Epiq’s clients and the substantial base of new clients that we expect will augment our long-term growth,” said Tom W. Olofson, chairman and CEO of Epiq Systems. “Increasingly, our clients want solutions to help them better manage eDiscovery costs and improve their operational effectiveness. Iris’s compelling offering accelerates our ability to address this client need in managed services, an area we had previously targeted as an important growth opportunity. Equally important, the acquisition is a big win for our shareholders as it provides additional long-term growth potential along with a near term bottom-line contribution.”
“Iris and Epiq share entrepreneurial cultures and a commitment to delivering the highest level of client service. This is a great opportunity for Iris to expand its potential by joining the preeminent global eDiscovery leader and a like-minded organization,” Mr. Baisden said. “Our combined client base will reap the full benefits of a robust eDiscovery platform combined with a pioneering managed services offering, as well as access to Epiq’s industry leading capabilities in bankruptcy and class action and mass tort settlement administration.”
For more information on this transaction, please contact:
Nick Baughan
nbaughan@marbau.com
610.616.3294
Chris Rose
crose@marbau.com
610.616.3298
Bill Takeuchi
wtakeuchi@marbau.com
610.616.3296
About Marks Baughan Securities
Marks Baughan provides investment banking services to growth companies. Our clients are software, technology-enabled services and data-intensive companies seeking shareholder liquidity or growth capital. We work tirelessly alongside our clients and excel at defensible positioning and disciplined processes that maximize shareholder value. Our professionals come from senior positions at bulge-bracket firms, giving our clients access to the relationships and experience that come from our years of interaction with the top executives and investors in companies in our fields. Our clients receive top-flight advice throughout any advisory relationship, because our boutique approach allows our senior advisors to stay deeply involved with each client on a continuous basis. No handoffs to junior staff. No preferential client relationships. No conflicts of interest.
For more information on Marks Baughan, visit www.marbau.com.
About Iris Data Services
Iris Data Services is the leader in eDiscovery managed services – no other provider has more clients, experience or focus. Iris’s suite of products includes Horizon℠, managed services processing that seamlessly integrates best-in-class applications, and Arc℠, a private Relativity® environment for a fixed monthly fee. Iris’s U.S. headquarters is in Kansas City and its European headquarters is in London. Iris provides global services through office locations in the United States, Europe, India and China.
For more information, please visit www.irisds.com.
About Epiq Systems
Epiq Systems is a leading global provider of integrated technology solutions for the legal profession, including electronic discovery, bankruptcy, and class action and mass tort administration. Epiq also offer full-service capabilities to support litigation, investigations, financial transactions, regulatory compliance and other legal matters. Epiq’s innovative technology and services, deep subject-matter expertise and global presence spanning 45 countries served from 20 locations allows it to provide secure, reliable solutions to the worldwide legal community.
For more information, please visit www.epiqsystems.com.