$30 million e-Discovery business for large litigation cases. $15 million debt.
- Big declines on the paper side of business over prior several years.
- E-Discovery side of business growing 50% annually.
- Equity wanted to invest for growth but debt investor held a blocking position.
- Encore had built up $30 million revenue business around the emerging growth e-Discovery business.
- Their growth strategy was a combination of purchasing local paper discovery providers and growing their electronic resources through development or purchase.
- Total spending required to attain the next set of objectives was $9-10 million.
- Equity saw the potential but the mezzanine lender held a blocking position.
- MorrisAnderson was brought in by the equity sponsors to evaluate the next tranche of investment and opportunities to negotiate with the mezzanine lender.
- MorrisAnderson worked with management to develop a business plan to focus on the e-Discovery side of the business without losing the leverage of the paper business.
- Morris Anderson negotiated a deal with the mezzanine lender and a restructuring of the senior debt that allowed $5 million of new equity to come into the company to provide funds for necessary investments in technologies, sales personnel, working capital and a pay down of the mezzanine debt.