FREE NEWSLETTER

GET EXCLUSIVE CONTENT

Free Newsletter Free Newsletter
reveal-banner-180px-x-150px-v1gif

“If I brought my guys another deal right now they would probably hang me”: Consilio’s CEO talks integration and opportunity

Added on the 9th Nov 2018 at 10:42 am
Share Button

The inside story on consolidation in the eDiscovery space from Consilio’s CEO Andy Macdonald

Ediscovery and document review giant Consilio is on its third private equity owner in a little over three years, as investors cash in on a fragmented and high-growth industry. In March 2018, Los-Angeles-based Shamrock Capital sold its stake in the business to GI Partners as part of Consilio’s take-over of rival Advanced Discovery. Just over six months on, and the acquisition spree continues. Consilio has acquired DiscoverReady in what is believed to be its largest deal yet.

“When it was announced that there was going to be a process run this summer we were caught a little off guard because it had only been a few months since we had acquired Advanced Discovery,” said Consilio’s CEO Andy Macdonald. “Under normal circumstances we would probably have taken a pass because we had so much going on. But given our high regard for the company and the executive team we felt that we had to participate.”

This wasn’t the first time Consilio had attempted to buy DiscoverReady. The relationship goes back all the way to 2014, when the business was owned by publicly-listed company Dolan Media. Dolan was experiencing liquidity issues at the time and began a process to sell DiscoverReady in order to raise capital.

“We were very active in that process and spent a lot of time with the executive team, learning not just about the business but about the people,” Macdonald said. “But then debt activists got involved and Dolan went into bankruptcy. We were very disappointed when the deal didn’t materialise.”

Consilio was attracted to DiscoverReady’s business model, which is focused on major corporates, with limited law firm direct business. Macdonald also cited DiscoverReady’s superlative service delivery. “I was impressed that they had managed to maintain their clients and relationships despite the turmoil going on around them. I wanted to buy into a business that rates customer-centric service so highly. I also wanted to keep those characteristics out of the hands of my competitors.”

But despite a defensive component to Consilio’s acquisition strategy, Macdonald is unperturbed by the changing competitive dynamics of the industry. When asked if he views transactional contract review players’ entry into the ediscovery space as a threat, he said he prefers to focus on clients instead.

“We have thousands of clients and I believe if we do a good job of delivering to those clients, there is never going to be a reason for them to talk to anyone else,” he said. “It is client outcome that counts and if we meet those expectations, I think rivals will have a hard time sliding in and taking our business.”

The focus for Consilio now is very much on integration. Macdonald himself has been involved in over 60 acquisitions and acknowledges that buying businesses is relatively easy, making the integration work is not.

“One thing I have learnt is that unless integration is someone’s specific remit, it won’t get done. Everyone has a day job,” he explained. “At Consilio we have, what we call, an integration management office, staffed by a team that is compensated, not on the legal side, but on that integration. With this transaction we have also hired Bain Consulting who will be part of the internal team and will be on site for four months.”

The integration kicks off this week with a focus on workflows. The company will be looking at best practice, what to keep and what needs to be improved. But the biggest challenge will be internationalising DiscoverReady’s operations.

“All of DiscoveryReady’s revenues are domestic to the US but 60 per cent of its clients are large, global entities with needs across the globe,” Macdonald said. “We want to keep the DiscoverReady experience for clients but give them the global footprint that Consilio has. That is where we will be spending a lot of our energy.”

With a focus on successfully integrating two major acquisitions this year, new deals are on the back burner. Macdonald acknowledged that, not only would another big bolt-on prove challenging for the internal team, further consolidation activity would be a concern for his investors.

But, in an industry worth somewhere between $8bn and $10bn a year, with no participant holding more than a ten per cent market share, the lure of further opportunities could prove too tempting.

“If a small deal pops up we may pursue it although we will try to take a six or seven month break so we can really focus on integration,” Macdonald said. “But we are as opportunistic as anyone else in this space so in the medium-term more acquisitions are definitely on the horizon. If I brought my guys another deal right now they would probably hang me.”

The newly combined company will operate from more than 70 offices, review centres and data centres in 11 countries. Its operations will continue to serve investigation, litigation and compliance matters of all sizes and complexities, anywhere in the world.

Amy Carroll

There are no comments yet, add one below.

Any Comment?