The Dolan Company (NYSE:DM) announced earlier this week that its DiscoverReady subsidiary had completed a significant strategic expansion in the electronic discovery sector with the acquisition of the assets of ACT Litigation Services, based in Valencia, Calif.
The purchase price was $65 million with additional future payments possible depending upon performance. The transaction closed July 25.
ACT is one of the country’s oldest and most successful complex litigation automation firms and specializes in providing technology and process solutions to clients with electronic discovery needs. The company delivers the most efficient available processes to complete e-discovery projects faster, better and more economically. It also provides hosting and review services.
DiscoverReady provides first-pass document review, managed services and data processing and hosting to the e-discovery sector. The company was a pioneer in fixed-fee document review and automated review. In 2009 it was acquired by The Dolan Company. Like ACT, DiscoverReady services the legal needs of large corporations and their legal counsel.
“Combining ACT and DiscoverReady solidifies our position in the top echelon of e-discovery providers, not just in talent, client base and capacity, but also in terms of quality and innovative solutions,” said James P. Dolan, president and chief executive of The Dolan Company. He said the acquisition combines industry leaders in review and in technology and process development.
Dolan said ACT’s trailing 12-month revenues were approximately $30 million. The transaction will be immediately accretive to cash earnings per share. He said the transaction reduces the company’s revenue concentration by spreading its business across many more clients. For example, upon closing the transaction, on a pro-forma basis, only one DiscoverReady client accounts for more than 10% of DiscoverReady’s revenues.
“We have known the team at ACT for more than decade. During that time, we have admired their strong market reputation and business philosophy,” said DiscoverReady chief executive officer Jim Wagner, adding, “We both are ‘process first’ organizations and ACT’s client-centric quality-focused culture complements our own.”
Both DiscoverReady and ACT are national companies serving a range of clients. DiscoverReady is headquartered in New York City with operational management in Charlotte, N.C., and San Francisco. ACT’s operating headquarters and data center are in Valencia, Calif., with other offices in Philadelphia, Pittsburgh, New York City, Cleveland and the Philippines. All existing locations for both companies will remain and the parties intend that all of ACT’s employees will be retained, Wagner said.
The complementary fit drove the acquisition, the executives said. While DiscoverReady was founded by lawyers who pioneered fixed-fee document review, ACT’s founders approached the market as engineers who provided custom technology and solutions for clients struggling with complex discovery matters.