Please email ft@wealthmonitor.com or call:EMEA: +44 (0)20 7059 6184 USA: +1 646 378-3155 for further information on wealthmonitor and how to receive more articles like the one below.
--------------------------------------------------------------------------------------------------------
Clearwell Systems, a privately owned, California-based electronic data discovery (EDD) business, could IPO in one to three years, CEO Aaref Hilaly said. While the EDD market has been a hotbed of merger and acquisition activity in recent years, one industry observer noted that almost none of these businesses had successfully floated.
California-based Guidance Software is one notable exception in the EDD sector that engaged in an IPO last year.
“There are two types [of companies], those who are recently acquired and those who would like to be acquired in the near future,” said the observer. Although many companies will say otherwise, he said that market movements suggest otherwise.
For example, EDD-provider Zantaz told this news service in April that it could float publicly this year. Yet, the business sold to Autonomy Corporation for USD 375m in July, following additional reports by this news service that a deal with IBM had fallen through in 2006 due to concerns that Zantaz’s contracts could expose IBM to too much risk of litigation.
“They [Clearwell] have over the past couple of years managed to make fairly substantial inroads into the corporate legal market,” said the observer. Yet, he added that competition for its business is growing fiercer with companies such as EMC and Symantec entering the sector.
Industry sources have told this news service that other businesses making moves into the space include IBM, Microsoft and Iron Mountain. According to Clearwell’s site, it has business relationships with AccessData, EMC, HP, Symantec, Microsoft, NetApp, and OnSite3.
Three-year-old Clearwell has raised some USD 30m through three rounds of funding, most recently USD 17m in August. The business’s technology helps organizations sort and manage documents toward the start of the electronic data discovery process, said the observer.
Clearwell CEO Hilaly – who joined two and a half years ago after selling CenterRun to Sun Microsystems for a reported USD 66m in 2003 - refused to disclose his current company’s revenues.
“It’s a small group of players that focus on this area,” said the industry observer of Clearwell.
Washington-based Attenex is one such competitor, he said. In April, Attenex CEO Kimra Hawley told this news service that, though contemplating an IPO, the business was attractive to potential acquirers. She said Guidance’s 5x trading multiple could be a valuation for her business, which had greater than USD 25m in revenues last year.
The industry observer said Clearwell could be a target for businesses looking to build up their EDD presence, those seeking to fill out existing offerings, or companies that focus on litigation services but that have not yet moved into the EDD market.
--------------------------------------------------------------------------------------------------------
wealthmonitor is a unique proprietary intelligence service that identifies the new wealth being created as a result of potential and announced liquitidy events. wealthmonitor provides clients with articles such as the one above in real-time via personalize emails and BlackBerry alerts, as well as bespoke reports. For more information please email ft@wealthmonitor.com or call:EMEA: +44 (0)20 7059 6184 USA: +1 646 378-3155
