It felt like everyone in the legal technology space went public in 2021. LegalZoom and Disco are very different companies, but both jumped into the market last summer, signaling a new stage for a legal tech sector that’s quietly become more and more powerful while the Street continued to be distracted by other shiny professional services objects.
Exterro is the kind of company that seemed poised to follow this move into the market. Its Legal Governance, Risk, and Compliance offering sits at that intersection of e-discovery, digital forensics, data privacy, and cybersecurity that everyone needs. Plus, revenue has quadrupled over the last four years and Exterro already brought the Jordan Lawrence Group and AccessData into the fold to create quite the attractive IPO pitch.
But ultimately, Exterro looked at the state of the industry and resisted the siren song for now. It’s looking like a pretty good decision.
While the market struggles, Exterro just completed a “strategic recapitalization and secured additional committed equity capital as part of a continuation vehicle transaction.” That’s a lot of words to say that Exterro is worth over a billion dollars and eager investors are banking on the company’s continued growth.
Which is why Exterro’s enjoying better timing than a rom-com protagonist. Shielded from the whims of the market and the bureaucracy of public ownership, Exterro’s now flush with resources and flexibility in a buyer’s market.
Bobby Balachandran, the founder and CEO of Exterro, summed it up by saying the soft market “is like everything being right-priced… I wouldn’t say we are in super bad times, but there’s a reality check in the market.” And with a lot of exciting and high growth products out there still not making money, that puts Exterro in an enviable position as a profitable company with loads of cash in a market with key strategic resources.
[Since 2018] Exterro has more than quadrupled its revenue, and now serves more than 3,000 customers across the world. Exterro’s concerted growth strategy has focused on organic product innovation, geographic expansion, and strategic M&A, including the acquisition and integration of Jordan Lawrence and AccessData. It has also included significant R&D investments in e-discovery, privacy, digital forensics, and incident management as well as investments in the Exterro team.
As Balachandran analogized it, legal tech is having its iPhone moment. “The iPhone used to be a lot of things. Once everything is put together in one package there aren’t separate items anymore. No one carries a separate camera anymore. This convergence is happening in the legal world.” Because the divisions between legal and business are fading when it comes to data management and there’s demand to bring the traditional “legal tech” use cases together with everything else. In light of this convergence, Exterro’s taking advantage of the moment to grow both organically and inorganically. Or, more bluntly, “innovate like crazy, accelerate product growth, and integerate new tech into our platform.”
The day will come when Exterro goes public, probably in 2023 at this point. But for now, it’s just going to continue improving its profile.
And why not in an environment like this?
Joe Patrice is a senior editor at Above the Law and co-host of Thinking Like A Lawyer. Feel free to email any tips, questions, or comments. Follow him on Twitter if you’re interested in law, politics, and a healthy dose of college sports news. Joe also serves as a Managing Director at RPN Executive Search.
