Reorg, the distressed debt and bankruptcy information provider backed by private equity firm Warburg Pincus, has hired advisers to explore a sale of all or part of the business that could value it at more than 1 $.5 billion, according to four people briefed on the matter.
Evercore, the independent investment bank chosen to handle the sale process, has begun contacting potential buyers interested in acquiring the company, the sources said. The process began about a week ago, they added.
Private equity groups have shown interest in Reorg in recent months, these people said, as buyout investors have bought up lucrative specialty content companies that can charge corporate clients high, recurring subscription fees. Rival data companies have also expressed interest in participating in the auction as they seek to shore up the industry.
Morningstar, the influential data provider, earlier this year acquired Leveraged Commentary and Data, which reports on debt financing transactions, from S&P. In 2021, Fitch Group acquired CreditSights, a research company focused on corporate debt analysis, from its founders.
Reorg’s clients include hedge funds, investment banks and law firms. He is best known for his intensive daily coverage of bankruptcy court hearings and behind-the-scenes negotiations between creditor groups and corporations.
While default rates had fallen to historic lows, the number of companies pursuing financial restructurings and bankruptcies is expected to pick up as interest rates climb and a possible economic downturn approaches.
Reorg stands to benefit significantly from what Jamie Dimon, CEO of JPMorgan Chase, has described as an impending economic “hurricane” as war in Ukraine and tightening Federal Reserve policy contribute to runaway inflation and a turbulent markets.
Warburg Pincus acquired a majority stake in Reorg in 2018 for a valuation of $400 million. Reorg sought to combine the characteristics of a tech company, using machine learning to quickly retrieve legal documents and transaction analysis, with original reporting from journalists as well as former lawyers and bankers. Its annual subscriptions can cost upwards of $100,000, as the service can replace the work of junior attorneys.
Kent Collier, the struggling investor and blogger, started Reorg in 2013 and remained the company’s chief executive.
Reorg, Evercore and Warburg declined to comment.