BANGALORE (Reuters) - Iron Mountain Inc (IRM.N), which provides information protection and storage services, is eyeing firms with expertise in electronic discovery as it plans to expand in the fast-growing litigation support services market.
“It is an area we intend to invest very aggressively,” Chief Executive Bob Brennan told Reuters in an interview.
E-discovery helps firms gather, restore, search, organize and deliver electronic data for using it as evidence in litigation, internal investigations and regulatory inquiries.
An increasingly litigious society, a growing number of federal, state and industry regulations, and the requirement for more information are the key trends helping e-discovery to grow, Brennan said.
“We believe it will be quite a large market opportunity for us for a long time,” said Brennan.
Boston, Massachusetts-based Iron Mountain entered the e-discovery market in 2007 by acquiring privately held Stratify. In 2008, revenue from the unit rose more than 30 percent.
It expects internal revenue growth of 7 percent to 12 percent for its broader digital segment in 2009.
The company, which had cash and cash equivalents of $278.4 million at the end of 2008, intends to grow the e-discovery business organically as well as inorganically, Brennan said.
The e-discovery market, which is about $3 billion to $4 billion in size, is expected to double in three years, said Robert W. Baird & Co analyst Andrea Wirth, quoting industry findings.
In the highly fragmented market, Iron Mountain competes with companies such as FTI Consulting Inc (FCN.N), Guidance Software Inc GUID.O, Epiq Systems EPIQ.O and a host of privately held firms including Clearwell Systems and Kroll.
“The fragmented market offers us a lot of scope to expand our platform pretty aggressively,” Brennan said.
Brennan, a former Cisco Systems Inc (CSCO.O) executive, joined Iron Mountain in 2004, following the company’s acquisition of Connected Corp, where he served as CEO. He became chief executive of Iron Mountain last year.
Iron Mountain generates strong free cash flow from a largely recurring revenue base, which helps to fund acquisitions, and the digital market continues to be an area it is targeting, analyst Wirth said.
Iron Mountain has spent about $300 million on acquisitions in the last five years, the largest being the $158 million deal for Stratify, according to Reuters Data.
Shares of Iron Mountain have shed 18 percent over the past one year, outperforming the broader S&P 1500 Commercial & Professional Services Index .15GSPCS, which has fallen 39 percent in the same period.
Editing by Deepak Kannan