Kansas City, KS-based Epiq Systems, Inc., a leading global provider of integrated technology solutions for the legal profession, 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). 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.
Epiq services include electronic discovery, bankruptcy, and class action and mass tort administration, as well as full-service capabilities to support litigation, investigations, financial transactions, regulatory compliance and other legal matters. 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.
Iris Data Services is the leader in eDiscovery managed services. The company’s suite of products includes HorizonSM, managed services processing that seamlessly integrates best-in-class applications, and ArcSM, 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.
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.
Epiq estimates that operating revenue for 2015 will be between $465 million and $485 million, adjusted EBITDA between $103 million and $109 million, and adjusted EPS between $0.86 and $0.92
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 the Company’s credit facility.
For more information, see http://www.epiqsystems.com/news.aspx?id=2147485020