Brainspace, the investigations and Ediscovery pioneer, is understood to be for sale.
Two sources independently told Artificial Lawyer in recent days that they understood the company is for sale. One source with extensive knowledge of the company said they had heard this information from ‘both inside and outside the company,’ but they could not confirm if a sale had already been reached yet.
This site contacted Brainspace, its parent company Appgate, and main investor Medina Capital, for a response. An external PR agency was brought in to provide a reply. They said: ‘As a privately held company, Appgate is unable to comment on any rumours regarding its financial strategy or operations at this time.’
This site went back to the PR agency asking them to clarify if they were denying that Brainspace was for sale. They went silent and have not at time of going to press replied to that question.
How a sale would take place is not certain, but one possibility is that it will be a trade auction, with potential buyers putting in bids. A similar strategy was understood to have been employed by HighQ when it was sold to Thomson Reuters.
As to who would buy Brainspace, there are several different groups of potential buyers. The most probable is that an already established Ediscovery company buys it – this would bring in additional tech capabilities and is in line with the ongoing trend for consolidation in this space, such as seen recently with the deal between NexLP and Reveal.
It would not be a massive add-on, given that the company is only around 40 people, according to LinkedIn. But, despite this it’s a well-known brand with some useful data investigation abilities, especially its interactive data visualisations.
The other main possibilities include a sale to another investment fund with an interest in legal tech, or perhaps a platform-builder company that is looking to break into the Ediscovery market, and Brainspace would be an ‘in’, but without huge expense. One outside possibility is a Big Four firm already involved in investigations work. However, they generally tend to be tech agnostic.
As to why Appgate and Medina Capital would potentially sell the business, the simple answer is that legal tech companies are seeing plenty of buyers at present and Brainspace has never really seemed to be a perfect fit for Appgate, or its earlier parent company, Cyxtera.
Appgate is focused on cyber security, and even though Brainspace’s patented technology could be useful in showing visualisations, it’s not really core to data security. It’s also the only strictly legal tech element inside Appgate.
Before that Brainspace was bought in 2016 by Medina and BC Partners. This was then folded into a conglomeration of data-related companies that was branded as Cyxtera – again, without having a core legal tech focus. More recently, Brainspace – as part of Appgate – was separated from that group.
As you can see, since 2016 the company has bounced around inside a far larger enterprise that was never dedicated to Ediscovery or legal tech more broadly. It therefore is perhaps a good time to sell a non-core asset at a time when there are multiple buyers in the market for this type of technology.
Last question: if this is another Ediscovery consolidation play who would buy it? One expert in the field told this site, it would likely be: ‘iConect, Logikcull, Everlaw, OpenText, Exterro, Nuix, or Relativity.’ Although, that covers a wide swathe of all the major companies in this market segment.
Overall then, a sale would not perhaps be a major step for the owners, as it’s a relatively small business and it’s not core to their strategy. For a very large Ediscovery company this would however be a very useful addition to their tech stack, it would also show that the consolidation wave in the legal tech field is continuing.