Beaverton-based Exterro is building the legal governance, risk and compliance platform that the company believes the corporate world needs as the work of general counsels and information security officers combine.
Founder and CEO Bobby Balachandran took another big step toward that last week with the acquisition of Portland e-discovery software maker Zapproved. It’s the third acquisition for the company and brings Zapproved’s legal hold and e-discovery product to the Exterro platform.
The other two acquisitions brought data privacy and digital forensic investigation products to the platform. Exterro’s product helps customers in legal and IT functions track, analyze, collect and manage all information related to the e-discovery process in litigation.
“The industry started (with companies as) specialists in different areas: privacy, e-discovery, forensics. (Customers) don’t want to look at (solutions) individually. There is benefit to solving the problems in one platform,” said Balachandran.
He started down this path in 2018 when the bootstapped company took outside investment for the first time and signed on its private equity backer Leeds Equity Partners. Exterro bought data privacy company Jordan Lawrence in 2019 and in 2020 it bought digital forensics company AccessData.
Last summer, Balachandran said he wanted to double down on this strategy and he went back to his investors and signed on a few more.
“In the summer we said we want to grow even faster into our IPO. We went out and brought in a few more heavy hitting investors, Coller Capital and Glendower Capital and others in the mix,” he said. “(It’s) the dry powder to do substantial acquisitions and invest in organic growth.”
For several years Balachandran has said the company is targeting an IPO. Last year, it looked like that could happen in 2023, but with the current economic volatility, Balachandran is content to wait for the right market conditions.
As for the company’s own business, he noted that it is “in a great position” even as large companies are starting to make cuts and hunker down for a possible recession. His optimism stems from Exterro’s place within its customers. The company helps them automate and run more efficiently in areas that aren’t going to lose importance in a downturn.
Data and information governance, risk and compliance aren’t places businesses can skimp, he said.
“We are in a good spot,” he added.
The company is profitable and growing. Balachandran expects more acquisitions and the current market means there could be good deals to be had.
“If you aren’t profitable and need to raise money, it’s a bad place to be in. Investors want growth and profitability. Companies can’t just throw money at growth anymore. For a company like Exterro, we are growing and profitable and we have the capital (to be a buyer),” Balachandran said. “There are a lot of attractive companies for acquisition. Same with talent.”
In the case of Zapproved, which was growing up alongside Exterro, the two company founders have been friends for years. Zapproved founder and CEO Monica Enand and Balachandran had been talking on an off over the years about ways to collaborate. The timing finally worked out.
The Zapproved deal adds 130 people to Exterro’s global team of 600. Exterro has more than quadrupled its revenue since 2018 and has more than 3,000 customers worldwide, including Boeing, United Healthcare and Oracle.
