KROLL ACQUIRED BY ALTEGRITY

Altegrity today announced plans to acquire Kroll from Marsh & McLennan Companies, in an all-cash transaction valued at $1.13 billion the companies announced. Kroll offers a range of security and technology services, including investigations, financial advice and intelligence, and more.

Altegrity is owned by Providence Equity Partners, a global private equity firm. The transaction is expected to close by September, assuming the usual approvals. Altegrity's CEO Mike Cherkasky served as president/CEO of Kroll from 2001-2004. MMC turned to Wachtell, Lipton, Rosen & Katz for legal counsel; Debevoise & Plimpton aided Altegrity and Providence.

Among Kroll's entities is Kroll Ontrack, which offers a range of services, software, and consulting to help legal, corporate, and governmental entities (and consumers) deal with data, including data recovery services. Kroll Ontrack has a high profile in the e-discovery community; it ranked as a top 5 overall services provider in the final Socha/Gelbmann e-discovery survey in 2008. In the same survey, it ranked in the 11-15 category for its software.

On EDD Update, Craig Ball, Law Technology News' e-discovery columnist, notes that MMC bought Kroll in the summer of 2004 for $1.9 billion. "Wonder if some of Kroll's investigative skills will be tasked to find out what happened to that $770 million in value lost to shell-shocked shareholders like me?" But, says Ball, "It's likely a good move for Kroll -- always a poor fit at Marsh and a minor contributor to revenues -- and a homecoming of sorts [for] Cherkasky."

"The new owners are probably a better conduit for the government investigation work that's an important part of Kroll's book of businesses," says Ball. But he caveats that it "will be interesting to see what conflicts emerge between Kroll's (and Ontrack's) Wall Street and AmLaw 100 work, and the work for Uncle Sam."

"Altegrity's acquisition of Kroll is one more example of the continuing mergers, acquisitions, and partnerships [within e-discovery]," say George Socha and Thomas Gelbmann. "Kroll Ontrack is certainly one of the largest and most well established providers of EDD services and software, so this sale is something we will be following with interest.The impact of this acquisition on Ontrack's direction will be interesting to track but could take a year or more to manifest itself."

Calls to our usual sources at Minn.-based Kroll Ontrack were deferred to Kroll's new headquarters. Kroll CEO Ben Allen told LTN that the sale definitely helps Kroll, and especially Kroll Ontrack, because (as Ball suggests) it will be a much bigger fish in the pond. As part of MMC, "Kroll was about 10%," but as part of Altegrity, it will be about "40% to 45%" of the company. Allen rebuffed any concerns about conflicts, saying the companies already had processes and procedures in place that work well.

As for the difference between the 2004 and 2009 sales prices, Allen deferred to MMC for comment. But he noted that Kroll had already sold off three significant entities, a drug screening business, a government services business, and a corporate advisory and restructuring group, since 2008.

Press Release  here.