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Exterro, an e-discovery and information governance software platform used by lawyers and compliance teams, has acquired the digital forensics firm AccessData, signaling further growth for the company and moving the legal tech market one step closer to consolidation.
The acquisition, announced Thursday, rounds out Exterro’s governance, risk, and compliance (GRC) platform by boosting its existing data collection and analysis capabilities. The firm declined to specify the terms of the deal but said it bought AccessData for more than $100 million.
Last year, Exterro snapped up the legal tech company Jordan Lawrence, enabling it to expand into the data privacy space.
“It was a very natural, market-driven acquisition,” said Bobby Balachandran, CEO of Exterro. He explained that he was seeing greater demand for a fully-integrated GRC platform from clients, which include Fortune 500 companies like Visa and American Express and Am Law 100 firms.
Founded in 2007, Exterro is a unified platform that aims to help companies gather, analyze, and select data needed for litigation, data privacy, and cybersecurity compliance matters. It uses artificial intelligence and machine learning to “surgically” get to the data, which it then stores securely in the cloud.
“Everything is driven by data,” explained Balachandran. “Companies are spending tens of millions of dollars per year trying to efficiently and securely find the important data in this landfill of information.”
In an exclusive interview with Business Insider, Balachandran breaks down the rationale behind the acquisition, and how it’ll fuel Exterro’s growth in the legal market.
Combining forces to move from reactive to proactive data solutions
Balachandran said he’s always had an eye on AccessData, which he described as the “gold standard” of digital forensic investigation technology. The company allows prominent federal agencies like the Federal Bureau of Investigations and large tax authorities around the world to quickly capture and process huge volumes of data.
Whereas before, AccessData would have to cross-reference data from various sources, Exterro can now provide contextual information — like the organization structure of a company or what’s happening in a case — to help expedite the process.
By combining AccessData’s data gathering prowess with Exterro’s key strength in mapping out the workflow of a case, “we can transition from acting in a reactive manner to taking a more proactive approach,” said Balachandran. “Do we litigate, or investigate, or prosecute — or not? We can help companies answer this question much more quickly.”
The acquisition positions Exterro for further growth and a probable IPO in a legal market that’s becoming increasingly consolidated
Exterro’s acquisition of AccessData “opens up headroom for continuous growth,” according to Balachandran. Exterro has already been growing at scale, with 500 employees and more than 3,000 customers. Exterro said it has seen high client retention and strong revenue growth.
All of this — plus the extra fuel provided by AccessData — makes the prospect of going public “very attractive,” said Balachandran, and an IPO is a “key area” he’s focusing on.
While he declined to disclose any dollar figures when it comes to valuation, the CEO said that Exterro would “definitely be a unicorn.”
The optimistic outlook is shaped by favorable conditions for integrated platforms like Exterro in the broader legal tech market.
“Everything starts from typically outsourced solutions, to point solutions, then to integrated platforms,” Balachandran explained. “The point solutions are going to have a tough time as integrated platforms evolve.”
It makes sense for companies to use integrated platforms from a cost and efficiency standpoint, as evidenced by the wave of acquisitions from other large legal tech companies like Clio and DocuSign.
Balachandran thinks it’s just a matter of time before the fragmented legal tech market becomes increasingly consolidated. “The market is driving it,” he said.