Slide 1: Investor Presentation May 2019
Investor Presentation May 2019
Slide 2: Disclaimer
Disclaimer THIS PRESENTATION HAS BEEN PREPARED FOR PIVOTAL ACQUISITION CORP. (“PIVOTAL”) and KLDISCOVERY (“KLD”) IN CONNECTION WITH THEIR PROPOSED BUSINESS COMBINATION. SUCH PRESENTATION MAY BE PRESENTED TO CERTAIN OF PIVOTAL’S STOCKHOLDERS, AS WELL AS OTHER PERSONS WHO MIGHT BE INTERESTED IN PURCHA
Slide 3: KLDiscovery provides software, services and solutions to shelter corporations from data challenges
KLDiscovery provides the software, services and solutions to shelter corporations from information governance, compliance and data challenges 3
Slide 4: Presenters
Presenters Christopher Weiler Dawn Wilson Jonathan J. Ledecky Kevin Griffin Chief Executive Officer Chief Financial Officer Chairman, Chief Executive Officer Co-Sponsor, Director o Mr. Weiler co-founded o Ms. Wilson joined KLDiscovery as o Mr. Ledecky is a seasoned o Mr. Griffin founded MGG KLDiscov
Slide 5: Best-in-Class Sponsorship with Aligned Interests
Best-in-Class Sponsorship with Aligned Interests The Carlyle Group Revolution Growth o The Carlyle Group (NASDAQ: CG) is a global investment firm with o Revolution is a growth equity firm with $975 million of assets $222 billion of assets under management that seeks to deploy under management that s
Slide 6: KLDiscovery Delivers on the Pivotal Team's Playbook
KLDiscovery Delivers on the Pivotal Team’s Playbook Playbook 1 Ripe for Digital A leading software and services provider that offers proprietary eDiscovery Technology software platforms that can be deployed on the cloud, on premise, or behind Disruption the client’s firewall 2 The optimal platform f
Slide 7: Company Highlights & Strategy
Company Highlights & Strategy
Slide 8: Protection & Guidance from Corporate Data Challenges
Protection & Guidance from Corporate Data Challenges Chief General Information Counsel Officer
Slide 9: Leading Platform for Legal Technology and Services
Leading Platform for Legal Technology and Services Company Highlights Key Statistics #3 global player in core eDiscovery with a market-leading proprietary software platform and $310M $75M >95% unique cloud delivery model FY19E Revenue FY19E Adjusted Customer #1 global player in Data Recovery, the EB
Slide 10: KLDiscovery Delivers A Mission-Critical Offering
KLDiscovery Delivers A Mission-Critical Offering KLDiscovery provides technology-enabled services and software to help law firms, corporations, government agencies, and consumers solve complex data challenges 1 2 3 Global Antitrust Matter Unified Archiving Data Recovery The Situation The Situation T
Slide 11: KLD is Leading the Shift to the Cloud
KLD is Leading the Shift to the Cloud Foundation Scale & Platform Growth Shift to Cloud 2019 2018 2017 Cloud Technology 2016 On-site storage and Advancements 2015 Furthered Data information & Innovation global Introduces Privacy governance expansion end-to-end and with eDiscovery Logistics 2014 incr
Slide 12: Expansive Global Reach
Expansive Global Reach 40+ locations in 20 countries | 10 data centers | 20 data recovery labs Americas EMEA APAC Revenue by Geography(1) APAC 2% EMEA 18% Americas 80% Data Center Corporate Locations (1) Total revenue for FY18. 12
Slide 13: Investment Highlights
Investment Highlights 1 Compelling Market Opportunity â–º $21.3 billion addressable market with multiple catalysts for substantial growth and acyclical industry dynamics(1) 2 Attractive End-to-End Technology Platform â–º First mover advantage as a leading software provider that offers a proprietary
Slide 14: Large Market Opportunity
1 Large Market Opportunity Rapidly expanding addressable market expected to reach $21.3 billion in 2022 with multiple catalysts of growth including the substantial growth of data and the industry’s shift to the cloud eDiscovery and Information Archiving(1) eDiscovery Market Share(1) ($B) $21.3 Other
Slide 15: Multiple Drivers of Market Growth
1 Multiple Drivers of Market Growth The Legal Services industry is in the midst of a renaissance driven by increasing levels of data, cost, and complexity – KLD offers the solutions to these challenges Data Proliferation Market Shift to the Cloud The Opportunity The Opportunity Market share is won b
Slide 16: End-to-End eDiscovery & Data Management Platform
2 End-to-End eDiscovery & Data Management Platform Integrated solution set powered by KLD’s proprietary Cloud, Artificial Intelligence, Data Recovery, and Machine Learning technology platform The Cloud Our Data Centers On Site Your Fire Wall Collecting & Processing & Reviewing & Recovering Data Pres
Slide 17: Distinctive Competitive Technology Advantage
ATTRACTIVE TECHNOLOGY PLATFORMS 2 Distinctive Competitive Technology Advantage In an industry where cloud adoption is increasing consistently, KLDiscovery offers a platform with Nebula that is available on premise, in the cloud, behind the firewall and on a mobile kit Technological Competitive Advan
Slide 18: Longstanding Customer Relationships Drive Visibility
3 Longstanding Customer Relationships Drive Visibility Customer Highlights(1) Revenue Breakdown(1) ✓ >4,300 global Legal Technology customers Subscription 11% ✓ 65% of the Fortune 500 Hosting Services Collections & 41% ✓ 95% of the Am Law 100 Processing 13% ✓ ~6,800 active matters Recurring Forensic
Slide 19: Globalization of KLD Salesforce
4 Globalization of KLD Salesforce Attractive leverage from incremental revenue driven by recent investments in sales capacity to capitalize on KLD’s global footprint and proprietary technology innovation Salesforce Highlights 1 Expanding KLD has meaningfully increased the quality of its sales force
Slide 20: Experts in M&A Execution
4 Experts in M&A Execution Management has a proven M&A track record and a playbook for extracting maximum value M&A Track Record Proven Playbook for Accretive M&A Geographies 1 Target Rationale Technology Identify Target Company that Meets Served Rigorous Criteria Focused on People, Client Client Ba
Slide 21: Significant Opportunity For Market Consolidation
4 Significant Opportunity For Market Consolidation Due to the fragmentation in the broader legal services industry, there is substantial opportunity to continue completing strategic acquisitions of scale as well as smaller, highly accretive tuck-ins Select Targeted Segments & Universe for M&A Illust
Slide 22: Rapid Debt Paydown Accretes to Equity Holders
5 Rapid Debt Paydown Accretes to Equity Holders o Strong free cash flow derived from accelerated Adjusted EBITDA growth and optimized revenue and operating model expected to result in rapid deleveraging o 2.9x pro forma net leverage at year-end 2019 – a 50% decrease to KLD’s existing net leverage le
Slide 23: FCF Growth and Attractive Tax Attributes
5 FCF Growth and Attractive Tax Attributes o With a new capital structure following the merger with Pivotal, KLD will have lower interest expense and lower leverage, which will greatly increase free cash flow and financial flexibility o The company intends to explore further opportunities to refinan
Slide 24: Highly Experienced Management Team
6 Highly Experienced Management Team Christopher Weiler Dawn Wilson Chief Executive Officer Chief Financial Officer o Oversees the KLD management team globally o Oversees KLD’s Finance, Accounting and HR functions o Co-founded KLDiscovery in 2005 and has 25+ years of o Joined KLDiscovery in 2017 and
Slide 25: Financial Highlights
Financial Highlights
Slide 26: Key Financial Highlights
Key Financial Highlights Multiple Levers for Growth and Margin Expansion Historical and Projected Revenue o Productivity gains from recent investments in global sales ($M) capacity o Leverage from cross border capabilities and buildout of datacenter capacity $347 o Continued investment in firm’s cul
Slide 27: Key Financial Highlights (cont'd)
Key Financial Highlights (cont’d) Adjusted EBITDA(1) Capital Expenditures EBITDA EBITDA Margin Capex % of Revenue $120 30% $30 7% 8% 26% 24% 7% $100 25% $25 6% 18% $92 $80 17% 20% $20 $21 4% 4% 5% $75 4% $60 15% $15 4% $55 $13 $13 3% $40 $48 10% $10 $12 2% $20 5% $5 1%—0%—0% 2017 2018 2019E 2020E 20
Slide 28: Transaction Summary
Transaction Summary KID iscAverv
Slide 29: Transaction Overview
Transaction Overview o Adjusted firm value of $799 million (10.7x 2019E Adjusted EBITDA) o Pro forma net debt / 2019E Adjusted EBITDA of 2.9x (includes partial paydown of existing debt as a result of the transaction) o $230 million Pivotal investment used to fund organic growth and a targeted M&A st
Slide 30: Comparable Companies
Comparable Companies
Slide 31: Comparable Companies – Relative Valuation
Comparable Companies – Relative Valuation KLDiscovery represents an attractive investment opportunity with a compelling valuation Vertical Software Information Software & Services FV / 2019E Revenue Median: 5.6x Median: 4.3x 2.6x 7.9x 6.3x 6.2x 5.0x 5.0x 4.4x 5.3x 5.1x 4.1x 4.3x 2.8x (1) FV / 2019E
Slide 32: Comparable Companies – Growth & Performance
Comparable Companies – Growth & Performance KLDiscovery’s financial metrics compare favorably to its publicly traded peers Vertical Software Information Software & Services ’18 – ’20E Revenue CAGR Median: 12.8% Median: 4.1% 8.3% 13.2% 12.4% 19.4% 19.9% 5.2% 8.0% 6.1% 5.9% 4.1% 2.9% 2.8% ’18 – ’20E A
Slide 33: Appendix
Appendix
Slide 34: Financials Disclosure
Financials Disclosure NON- GAAP FINANCIAL MEASURES: WE PREPARE AUDITED FINANCIAL STATEMENTS IN ACCORDANCE WITH U.S. GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (“GAAP”). WE ALSO DISCLOSE AND DISCUSS OTHER NON- GAAP FINANCIAL MEASURES SUCH AS ADJUSTED EBITDA, UNLEVERED FREE CASH FLOW AND LEVERED FREE CA
Slide 35: Financials Disclosure (cont'd)
Financials Disclosure (cont’d) OUR PRESENTATION OF ADJUSTED EBITDA SHOULD NOT BE CONSTRUED AS AN INFERENCE THAT OUR FUTURE RESULTS WILL BE UNAFFECTED BY ANY OF THE ADJUSTED ITEMS, OR THAT OUR PROJECTIONS AND ESTIMATES WILL BE REALIZED IN THEIR ENTIRETY OR AT ALL. IN ADDITION, BECAUSE OF THESE LIMITA
Slide 36: Adjusted EBITDA and Free Cash Flow Reconciliation
Adjusted EBITDA and Free Cash Flow Reconciliation Reconciliation ($M) Fiscal Year Ended December 31, 2017A 2018A PF 2019E (1) PF 2020E (1) Net Income / (Loss) ($72.2) ($67.7) ($51.2) ($0.4) Amortization of Acquired Intangibles 30.0 30.0 29.9 29.9 Depreciation 24.8 24.7 24.5 28.8 Interest and Financi