PRIVILEGED AND CONFIDENTIAL ATTORNEY-CLIENT PRIVILEGED ATTORNEY WORK PRODUCT
MEMORANDUM
TO: Howard Bellamy, Responsible Partner, Calderwood & Harkness LLP
FROM: Monica Reyes, Lead Associate; Elliot Nguyen, Working Associate; Tamara J. Westbrook, Of Counsel, Litigation Technology & E-discovery — Calderwood & Harkness LLP
DATE: June 7, 2023
RE: Custodian Identification and Collection Protocol — FTC Second Request Compliance, FTC File No. 231-0487; In re: Solara Digital Infrastructure Fund IV LP / PCS Acquisition Corp. Proposed Acquisition of Pinnacle Cloud Systems, Inc.
COPIES: Graham A. Whitfield (Solara Digital Infrastructure GP LLC, Founding Partner & CEO); Sandra K. Levinson (Solara Digital Infrastructure GP LLC, Co-Managing Partner & CIO)
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I. Purpose and Scope
The purpose of this memorandum is to establish the custodian identification list, document collection methodology, applicable date ranges, data sources, de-duplication and filtering protocols, and vendor coordination procedures for compliance with the Second Request issued by the Federal Trade Commission on May 29, 2023 (FTC File No. 231-0487) (the "Second Request"). This protocol is intended to serve as the governing framework for all collection and processing activities on the Solara side of the proposed transaction and to ensure that the team's efforts are organized, defensible, and efficient in meeting the requirements of the Second Request within the targeted compliance timeline.
The Second Request contains forty-seven (47) specifications covering documents and data relating to the proposed acquisition of Pinnacle Cloud Systems, Inc. ("Pinnacle" or the "Target") by Solara Digital Infrastructure Fund IV LP ("Fund IV"), through its wholly owned indirect subsidiary, PCS Acquisition Corp. ("Merger Sub"), pursuant to the Stock Purchase Agreement dated April 14, 2023 (the "Merger Agreement"). The specifications are wide-ranging and encompass, among other things, documents and data concerning relevant product and geographic markets, competition, pricing, customers, market entry and expansion, integration and combination planning, financial projections, and the strategic rationale for the proposed acquisition. Compliance with the Second Request requires a comprehensive and well-coordinated effort across multiple entities, custodians, and data sources.
This protocol governs collection on the Solara side of the transaction. For purposes of this memorandum, the "Solara side" encompasses the following entities:
(a) Solara Digital Infrastructure LP (the fund management platform);
(b) Solara Digital Infrastructure GP LLC (the general partner entity);
(c) Solara Digital Infrastructure Fund IV LP (the acquiring fund); and
(d) Meridian Workflow Solutions, Inc. ("Meridian"), the existing Solara portfolio company headquartered at 350 North Clark Street, Suite 2200, Chicago, IL 60654, whose products and competitive positioning are directly at issue in the FTC's investigation.
Pinnacle-side custodian identification and collection is being handled separately by Hargrove, Pelletier & Stein LLP ("HPS") under the direction of Catherine A. Pelletier, Lead Partner, and David L. Morrissette, Associate, with offices at 2001 Ross Avenue, Suite 3600, Dallas, TX 75201. Coordination between the Calderwood & Harkness ("C&H") and HPS teams is essential to ensure consistency in collection methodologies, date ranges, and search term application, as well as to avoid duplicative collection of cross-party communications. Pinnacle has identified fourteen (14) custodians on its side, all of whom are managed by HPS. Coordination calls between C&H and HPS are scheduled on a bi-weekly basis, with the first such call having taken place on June 5, 2023.
This memorandum should be read in conjunction with the engagement letter dated May 30, 2023, between Calderwood & Harkness LLP and Solara Digital Infrastructure LP, which sets forth the scope of the firm's retention in connection with the Second Request compliance effort. Additionally, the team is in the process of finalizing a Clawback / Non-Waiver Agreement with FTC Staff, which is targeted for execution on or about June 9, 2023. That agreement, consistent with Federal Rule of Evidence 502(d) principles, will govern the treatment of any inadvertently produced privileged materials and is an essential component of the privilege protection framework for this engagement.
II. Transaction Background
This section provides a summary of the proposed transaction and the key parties involved, for context in understanding the custodian identification rationale and collection scope set forth in subsequent sections.
Acquirer. The acquiring entity is Solara Digital Infrastructure Fund IV LP ("Fund IV"), a Delaware limited partnership with approximately $4.2 billion in committed capital. Fund IV is one of four investment funds managed by Solara Digital Infrastructure LP (collectively with its affiliates, "Solara"), a private equity platform focused on digital infrastructure, enterprise software, and technology-enabled services, with total assets under management of approximately $14.7 billion. Solara's principal office is located at 200 Tatnall Street, Suite 1400, Wilmington, DE 19801.
General Partner. Fund IV's general partner is Solara Digital Infrastructure GP LLC (the "GP"), which is managed by Graham A. Whitfield, Founding Partner & Chief Executive Officer, and Sandra K. Levinson, Co-Managing Partner & Chief Investment Officer. The GP is responsible for all investment decisions on behalf of Fund IV, subject to the approval of the Fund IV Investment Committee.
Merger Sub. PCS Acquisition Corp. ("Merger Sub") is a newly formed Delaware corporation and wholly owned indirect subsidiary of Fund IV, organized for the sole purpose of consummating the acquisition of Pinnacle. Merger Sub's Employer Identification Number is 92-5038471. Pursuant to the Merger Agreement, Merger Sub will merge with and into Pinnacle, with Pinnacle surviving as the surviving entity and an indirect wholly owned subsidiary of Fund IV.
Target. Pinnacle Cloud Systems, Inc. ("Pinnacle") is a Delaware corporation headquartered at 8700 Research Boulevard, Suite 500, Austin, TX 78758. Founded in 2011, Pinnacle is a leading provider of cloud-based portfolio analytics, risk modeling, ESG scoring, and performance attribution software, sold on a subscription SaaS basis to institutional asset managers, pension funds, and insurance companies. Pinnacle's Chief Executive Officer is Nathaniel R. Okonkwo; its Chief Financial Officer is Diane M. Hartwell; and its General Counsel is Marcus E. Culberson. The company has approximately 1,420 employees. For the last twelve months ("LTM") ended March 31, 2023, Pinnacle reported revenue of approximately $387 million and EBITDA of approximately $74.6 million, representing an EBITDA margin of approximately 19.3%.
Transaction Value. The proposed acquisition values Pinnacle at an enterprise value of approximately $1.63 billion, consisting of approximately $1.19 billion in cash consideration and approximately $440 million in rollover equity from management and existing investors, representing approximately 27% of the total enterprise value. The rollover equity structure is designed to align the interests of continuing management with Fund IV and to provide management with ongoing economic participation in the combined platform.
Existing Portfolio Company at Issue. Meridian Workflow Solutions, Inc. ("Meridian") is a Delaware corporation headquartered at 350 North Clark Street, Suite 2200, Chicago, IL 60654. Meridian's Chief Executive Officer is Priya N. Raghavan. For the LTM period ended March 31, 2023, Meridian reported revenue of approximately $212 million. Meridian provides SaaS-based trade order management system ("OMS"), execution management system ("EMS"), and compliance workflow software for buy-side institutional investors. Meridian was acquired by Solara through Fund III in November 2020 at an enterprise value of approximately $680 million. Meridian's relevance to the FTC's investigation arises from the horizontal overlap between its analytics module capabilities and Pinnacle's portfolio analytics and performance attribution offerings, as well as the potential for vertical integration between Meridian's OMS functionality and Pinnacle's performance attribution and risk modeling tools.
FTC Concern Areas. Based on the specifications contained in the Second Request and preliminary communications with FTC Bureau of Competition staff, the Commission's investigation appears to focus on two primary theories of competitive harm:
(1) Horizontal overlap in cloud-based portfolio analytics and performance attribution software, where both Pinnacle and Meridian (through its analytics module) compete for the same institutional customer base; and
(2) Vertical foreclosure concerns regarding the potential for data integration between Meridian's OMS platform and Pinnacle's performance attribution functions, which could create incentives or the ability for the combined entity to foreclose competing OMS or analytics providers from accessing interoperability features, data feeds, or APIs on competitive terms.
The specifications also address a range of additional topics, including barriers to entry, customer switching behavior, pricing strategies, market definition, and the competitive significance of various product features.
Key Dates. The following timeline summarizes the key dates in the transaction and regulatory process to date:
• Merger Agreement executed: April 14, 2023
• HSR Act premerger notification filing: April 28, 2023
• Initial HSR waiting period expired: May 28, 2023 (extended by one day from the statutory expiration by agreement between the parties and FTC Staff)
• Second Request issued: May 29, 2023
• Engagement letter executed (C&H / Solara): May 30, 2023
• Litigation hold notices issued: May 30, 2023
Sellers. The selling shareholders of Pinnacle are:
• Thorngate Capital Partners LP, holding approximately 58% of Pinnacle's outstanding equity. Julian V. Strathmore is the Managing Director responsible for the Pinnacle investment at Thorngate, with offices at 555 California Street, Suite 3100, San Francisco, CA 94104.
• Management shareholders, holding approximately 22% of Pinnacle's outstanding equity, a portion of which will be rolled over into the post-closing equity structure.
• Crestline Ventures LLC, holding approximately 20% of Pinnacle's outstanding equity. Angela W. Frederickson is the Managing Partner of Crestline Ventures.
III. Custodian Identification
A. Overview
The team has identified a total of eighteen (18) custodians on the Solara side of the transaction whose files are expected to contain documents responsive to one or more of the forty-seven (47) Second Request specifications. These custodians are organized into two groups:
• Solara GP / Fund IV Custodians: Twelve (12) custodians from the Solara GP management team, Fund IV investment team, and related operational and support functions.
• Meridian Custodians: Six (6) custodians from Meridian's senior management team.
Custodians were identified through the following methods:
(a) In-person and telephonic interviews with senior Solara personnel, including Graham A. Whitfield and Sandra K. Levinson, conducted on May 31 and June 1, 2023;
(b) Telephonic interviews with Meridian senior management, including Priya N. Raghavan, conducted on June 2, 2023;
(c) Detailed review of each of the forty-seven (47) Second Request specifications to identify the types of individuals likely to possess responsive documents;
(d) Analysis of organizational charts and reporting structures for both Solara GP / Fund IV and Meridian, provided by the respective entities on May 31, 2023; and
(e) Review of the Fund IV Investment Committee membership list, deal team composition for the Pinnacle acquisition, and Meridian board of directors composition.
The custodian identification process was guided by the Second Request's focus on the following substantive areas:
(a) Relevant product and geographic markets for portfolio analytics, risk modeling, order management, and compliance workflow software;
(b) Competition between Pinnacle, Meridian, and identified third-party competitors, including but not limited to Marlowe Asset Management Analytics Corp. and Arclight Data Systems;
(c) Pricing strategies, customer switching behavior, and barriers to entry in the relevant markets;
(d) Integration and combination planning between Pinnacle and Meridian or between Pinnacle and other Solara portfolio companies; and
(e) Financial projections, including revenue forecasts, profitability analyses, and growth expectations for Pinnacle, Meridian, and the combined entity.
The resulting eighteen-custodian list represents our assessment of the individuals most likely to possess documents responsive to the Second Request specifications. The list may be supplemented if additional custodians are identified during the custodian interview process (to be completed by June 12, 2023), during the search term negotiation process with FTC Staff, or if FTC Staff specifically requests collection from additional individuals.
B. Solara GP / Fund IV Custodians (12 Custodians)
Custodian 1: Graham A. Whitfield — Founding Partner & CEO, Solara Digital Infrastructure GP LLC
Mr. Whitfield is the senior decision-maker on all Fund IV investments and is one of two signatories to the Merger Agreement on behalf of Fund IV. As Founding Partner and CEO, Mr. Whitfield is involved in all aspects of deal approval and strategic rationale for Fund IV acquisitions. His files are expected to contain deal-related communications with the Fund IV investment team, Pinnacle management, Thorngate Capital Partners, outside advisors (including investment bankers and legal counsel), board materials, Investment Committee memoranda, and strategic planning documents relating to the Pinnacle acquisition, Meridian's competitive positioning, and the broader digital infrastructure investment thesis. Mr. Whitfield's files are expected to be among the most responsive to the Second Request specifications addressing the strategic rationale for the acquisition, competitive analysis, and integration planning.
Custodian 2: Sandra K. Levinson — Co-Managing Partner & CIO, Solara Digital Infrastructure GP LLC
Ms. Levinson serves as the Co-Managing Partner and Chief Investment Officer of Solara Digital Infrastructure GP LLC and is responsible for overseeing the investment thesis for Fund IV and for directing diligence, underwriting, and competitive analysis across all Fund IV portfolio investments. Her files are expected to contain communications regarding the Pinnacle acquisition strategy, the diligence process (including financial modeling, market analysis, and competitive landscape assessments), Meridian portfolio management, and the strategic rationale for combining Pinnacle's analytics capabilities with Meridian's OMS platform. Ms. Levinson's files are expected to be directly responsive to specifications concerning market definition, competitive dynamics, product overlap, and integration planning.
Custodians 3–8: Fund IV Investment Team / Deal Team Members (Six Custodians)
These six custodians are members of the Fund IV investment team who were directly involved in sourcing, diligence, financial modeling, and integration planning for the Pinnacle acquisition. Their positions span the Vice President, Principal, and Analyst levels within the Fund IV deal team. The specific names and titles of these individuals are in the process of being confirmed through the organizational chart review and custodian interview process and will be documented in an updated version of this protocol no later than June 12, 2023, upon completion of the custodian interviews.
The rationale for including all six members of the deal team is that these individuals were directly responsible for preparing Investment Committee materials, building and maintaining the financial models used to evaluate the Pinnacle acquisition, conducting market analyses and competitive landscape assessments responsive to multiple Second Request specifications, and developing preliminary integration plans for combining Pinnacle's and Meridian's respective product offerings. Their files are expected to contain detailed financial models, market sizing analyses, competitive feature comparisons, customer overlap analyses, and communications with Pinnacle management and advisors during the diligence process.
Custodian 9: Solara Investor Relations / Fund Operations Lead
This individual is the senior member of Solara's investor relations and fund operations team responsible for communications with Fund IV limited partners regarding portfolio investments, including the Pinnacle acquisition. This custodian's files are expected to contain communications with limited partners and LP advisory committee materials discussing the Pinnacle acquisition, the strategic rationale for the investment, and the expected returns associated with the combination of Pinnacle and Meridian. The name of this custodian will be confirmed upon completion of the custodian interviews.
Custodian 10: Solara In-House Legal / Compliance Lead
This individual is the senior in-house legal and compliance professional at Solara GP who was responsible for coordinating with outside counsel on the Pinnacle acquisition, overseeing the HSR filing preparation, managing regulatory correspondence, and addressing privilege-related issues throughout the deal process. This custodian's files are expected to contain communications with Calderwood & Harkness LLP and other outside counsel, HSR filing materials, and correspondence with FTC Staff. Due to the significant privilege considerations associated with this custodian's files, the collection and review of this custodian's documents will be subject to heightened privilege review protocols as described in Section VII below and in the forthcoming Privilege Review Protocol and Guidelines. The name of this custodian will be confirmed upon completion of the custodian interviews.
Custodians 11–12: Solara Operating / Portfolio Management Professionals (Two Custodians)
These two individuals are senior members of Solara's operating and portfolio management team who are responsible for oversight of Meridian and other technology sector portfolio companies within the Solara fund family. Their files are expected to contain communications regarding Meridian's operational performance, competitive positioning vis-à-vis Pinnacle and other market participants, strategic direction, product roadmap decisions, and board-level reporting. These custodians' files are expected to be particularly responsive to Second Request specifications concerning competition and market overlap between Meridian and Pinnacle, as well as specifications addressing the ongoing management of existing portfolio companies. The names and titles of these custodians will be confirmed upon completion of the custodian interviews.
C. Meridian Custodians (6 Custodians)
Custodian 13: Priya N. Raghavan — CEO, Meridian Workflow Solutions, Inc.
Ms. Raghavan is the Chief Executive Officer of Meridian and the senior executive responsible for all aspects of Meridian's business, including competitive positioning, product strategy, customer relationships, and any interactions with Pinnacle or other competitors. As CEO, Ms. Raghavan is expected to be a key custodian for responsive documents regarding horizontal overlap between Meridian's analytics module and Pinnacle's portfolio analytics and performance attribution offerings, as well as documents regarding the vertical integration opportunities between Meridian's OMS platform and Pinnacle's analytics tools. Her files are expected to contain strategic planning documents, board presentations, competitive assessments, customer communications, and correspondence with Solara GP regarding Meridian's market position and growth strategy.
Custodian 14: Meridian CFO
Meridian's Chief Financial Officer is responsible for all financial reporting, budgeting, pricing, and revenue analysis for the company. This custodian's files are expected to contain financial data, pricing information, revenue breakdowns by product line and module (including Meridian's analytics module, which generated revenue of approximately $37.4 million in the LTM period, representing approximately 17.64% of Meridian's total revenue of $212 million), customer contract terms and economics, and financial projections. These documents are directly responsive to multiple Second Request specifications addressing pricing, financial performance, and market share. The name of this custodian will be confirmed upon completion of the custodian interviews.
Custodian 15: Meridian Head of Product / CTO
Meridian's Head of Product or Chief Technology Officer is responsible for the company's product roadmap, technology architecture, and product development priorities. This custodian's files are expected to contain product roadmap documents, analytics module functionality descriptions, API architecture and interoperability documentation, competitive feature comparisons with Pinnacle and other market participants, and technical assessments of integration opportunities. These documents are responsive to specifications addressing product market definition, competitive dynamics, barriers to entry related to technology and product features, and the feasibility of integration between Meridian and Pinnacle product platforms. The name and exact title of this custodian will be confirmed upon completion of the custodian interviews.
Custodian 16: Meridian Head of Sales / Chief Revenue Officer
Meridian's Head of Sales or Chief Revenue Officer is responsible for revenue generation, customer acquisition, and the management of Meridian's sales force and go-to-market strategy. This custodian's files are expected to contain sales data, win/loss records documenting competitive encounters with Pinnacle and other competitors (including Marlowe Asset Management Analytics Corp. and Arclight Data Systems), customer switching data, pricing proposals, RFP responses, and internal sales strategy communications. These documents are directly responsive to specifications addressing competition, customer acquisition and retention, pricing, and barriers to entry. The name and exact title of this custodian will be confirmed upon completion of the custodian interviews.
Custodian 17: Meridian General Counsel / Head of Legal
Meridian's General Counsel or Head of Legal is responsible for regulatory compliance, customer contract negotiations, and other legal matters affecting the company. This custodian's files are expected to contain regulatory compliance materials, customer contract negotiations (including any non-compete or exclusivity provisions), prior HSR-related materials from the Fund III acquisition of Meridian in November 2020, and correspondence with Solara GP in-house legal and outside counsel regarding the Pinnacle acquisition and Second Request compliance. As with Custodian 10 (Solara in-house legal/compliance lead), the collection and review of this custodian's documents will be subject to heightened privilege review protocols. The name of this custodian will be confirmed upon completion of the custodian interviews.
Custodian 18: Meridian VP of Business Development / Strategy
Meridian's Vice President of Business Development or Strategy is responsible for market analysis, strategic partnerships, M&A evaluation, and long-range strategic planning for the company. This custodian's files are expected to contain market analysis documents, strategic planning presentations, M&A-related communications (including any prior evaluation of acquisitions or partnerships involving Pinnacle or other analytics providers), and integration planning materials developed in connection with the proposed Pinnacle acquisition. These documents are responsive to specifications addressing the strategic rationale for the acquisition, competitive dynamics, and integration planning. The name and exact title of this custodian will be confirmed upon completion of the custodian interviews.
D. Coordination with Pinnacle-Side Custodians
As noted in Section I, Pinnacle has separately identified fourteen (14) custodians on its side of the transaction. Custodian identification and collection for the Pinnacle side are being managed by Hargrove, Pelletier & Stein LLP, under the direction of Catherine A. Pelletier (Lead Partner) and David L. Morrissette (Associate).
Key Pinnacle custodians are expected to include, at a minimum, the following individuals:
• Nathaniel R. Okonkwo, Chief Executive Officer
• Diane M. Hartwell, Chief Financial Officer
• Marcus E. Culberson, General Counsel
The identities and titles of the remaining eleven Pinnacle custodians have been communicated to this team by HPS and are maintained in a separate coordination tracking document.
Coordination between C&H and HPS is critical in several respects. First, the teams must ensure that cross-party communications (i.e., communications between Solara/Meridian personnel and Pinnacle personnel during the diligence process, deal negotiation, and integration planning phases) are not collected and reviewed in a duplicative manner, which would unnecessarily increase costs and risk inconsistent privilege determinations. Second, the teams must ensure consistency in the applicable date ranges and search methodologies applied on each side, so that the combined production is coherent and defensible. Third, the teams must coordinate on privilege issues, particularly with respect to communications subject to a common interest or joint defense privilege that involve both Solara and Pinnacle personnel or their respective counsel.
Bi-weekly coordination calls have been scheduled between Monica Reyes (C&H, Lead Associate) and David L. Morrissette (HPS, Associate) to address these and other coordination issues on an ongoing basis. The first such call took place on June 5, 2023, and covered preliminary custodian lists, anticipated date ranges, and high-level collection approaches. Additional ad hoc calls will be scheduled as needed to address time-sensitive coordination matters.
IV. Document Collection Methodology
A. Data Sources
The following data sources have been identified for collection from the eighteen (18) Solara-side custodians. This inventory is based on preliminary information gathered through custodian notification questionnaires and initial interviews with Solara GP and Meridian IT personnel. The data source inventory may be supplemented based on the results of the custodian interview process, which is expected to be completed by June 12, 2023.
1. Email Systems
Solara GP / Fund IV. Solara GP utilizes Microsoft Outlook / Exchange hosted on Ashgrove Software as its primary email platform. Collection will encompass primary mailboxes and archive folders for all twelve (12) Solara custodians. Archived and journaled email will be collected in addition to active mailbox contents to ensure completeness. Ashgrove Software retention policies have been confirmed to preserve email for the entirety of the applicable date range (January 1, 2020 through present).
Meridian. Meridian likewise utilizes Microsoft Outlook / Exchange hosted on Ashgrove Software as its primary email platform. Collection will encompass primary mailboxes and archive folders for all six (6) Meridian custodians. Meridian's IT department has confirmed that email retention policies cover the applicable date range.
Shared / Functional Mailboxes. In addition to individual custodian mailboxes, the team will identify and collect from any shared or functional mailboxes to which one or more custodians had access and which may contain responsive documents. Preliminary identification has revealed the following shared mailboxes of potential relevance at Solara GP:
• deals@solaradigital.com (shared mailbox for deal-related communications)
• investmentcommittee@solaradigital.com (shared mailbox for IC-related materials and scheduling)
Additional shared mailboxes may be identified during the custodian interview process and will be added to the collection scope as appropriate.
2. Shared Drives and File Servers
Solara GP. Solara GP maintains a Westvale Services Inc. site for Fund IV deal files, which includes a dedicated folder structure for the Pinnacle deal room as well as a Meridian portfolio management folder containing ongoing operational and financial reporting materials. The team will collect all documents from the Pinnacle deal room folder and targeted subfolders of the Meridian portfolio management folder that are responsive to the applicable date range and specifications.
Meridian. Meridian maintains both an on-premise file server and a Westvale Services Inc. site for internal document management. The on-premise file server contains legacy documents and certain departmental files. The team will collect documents from the following shared folders on both the on-premise server and Westvale Services Inc.:
• "Strategic Planning" — company-wide strategic plans, market assessments, and competitive analyses
• "Product" — product roadmap documents, feature specifications, API documentation, and competitive feature matrices
• "Sales" — sales reports, pipeline data, win/loss analyses, and customer correspondence
• "Executive" — board presentations, executive team meeting materials, and C-suite correspondence
3. Messaging and Collaboration Platforms
Meridian Solutions (Solara GP). Solara GP uses Meridian Solutions as its primary internal instant messaging and team collaboration platform. The team will collect messages from the following Meridian Solutions channels, which have been identified as potentially containing responsive communications:
• #pinnacle-deal (dedicated channel for the Pinnacle acquisition deal team)
• #fund-iv-investments (general channel for Fund IV investment discussions)
• #meridian-ops (channel for Meridian operational oversight and reporting)
In addition, direct messages (DMs) for all eighteen (18) custodians who have Meridian Solutions accounts will be collected from the applicable date range. Any additional Meridian Solutions channels identified during the custodian interview process will be added to the collection scope.
Northgate Data Systems (Meridian). Meridian uses Northgate Data Systems as its primary internal messaging and collaboration platform. The team will collect messages from relevant Teams channels (to be identified through custodian interviews and IT department consultation) as well as direct messages for the six (6) Meridian custodians.
Both Meridian Solutions and Teams data will be exported in native format using the respective platforms' export and eDiscovery functionality and subsequently converted to reviewable formats by Keymark Document Solutions LLC ("Keymark") for ingestion into the Crestline Technologies review environment. The conversion process will preserve message threading, timestamps, sender/recipient metadata, and any embedded attachments or linked files.
4. Personal Devices
Custodian interview questionnaires (to be completed by June 12, 2023) will include specific questions designed to identify any use of personal email accounts (e.g., Northgate Software, Cascade Health IT, personal Ridgeline Technologies accounts), personal mobile devices (including text messages, coss, and Meridian Services Inc. messages), or personal cloud storage services (e.g., Larkspur Technologies, Hollowell Health IT personal accounts) for business-related communications. The use of personal devices and accounts for business communications is an area of particular sensitivity in Second Request compliance, and FTC Staff are known to inquire specifically about the completeness of collections from these sources.
Where personal device usage is identified, forensic images or targeted exports will be taken with the cooperation of the relevant custodian, supervised by Tamara J. Westbrook, Of Counsel for Litigation Technology & E-discovery. All personal device collections will be documented via chain-of-custody forms, and the scope of each collection will be narrowly tailored to capture only business-related communications within the applicable date range, in order to minimize intrusion on custodians' personal privacy.
5. Cloud Repositories
Solara GP. Solara GP utilizes a firmwide box enterprise account for document management and file sharing. Targeted collection will be performed from deal-specific folders within the box account, including folders related to the Pinnacle acquisition, Meridian portfolio oversight, and Fund IV strategic planning.
Meridian. Certain members of Meridian's product and engineering teams utilize Crestline Software (Hollowell Health IT) for document creation, storage, and collaboration. Collection from Crestline Software will target the accounts of relevant Meridian custodians (Custodians 15 and 18, in particular) and will encompass Stonefield Health IT, Sheets, Slides, and any other file types stored in the custodians' Hollowell Health IT accounts.
Third-Party Data Rooms. The team will also collect from any third-party data rooms or virtual deal rooms utilized during the Pinnacle acquisition diligence process. Preliminary investigation indicates that an Thackeray Solutions virtual data room was established by Pinnacle's financial advisor, and a Crestline Solutions room may have been used for certain financial diligence materials. The contents of these data rooms, to the extent accessible and within the control of the Solara parties, will be preserved and collected.
6. Structured Data / Business Systems
In addition to unstructured documents and communications, the Second Request requires the submission of structured data from various business systems. The following structured data sources have been identified:
• Quillon Data Systems (Meridian): Meridian's customer relationship management system contains customer lists, pipeline data, opportunity records, win/loss records, and related sales activity data. This data will be extracted in structured format for use in the planned structured data submissions.
• Financial Planning Systems (Solara and Meridian): Both Solara GP and Meridian maintain financial planning and budgeting systems containing revenue data, pricing schedules, financial projections, and historical financial performance data. Extracts from these systems will support the financial data submission and other specifications.
• Product Databases (Meridian): Meridian maintains internal databases documenting product feature matrices, API specifications, and interoperability documentation. These materials will be collected to support the product feature matrix submission and to respond to specifications addressing product functionality and competitive comparisons.
These structured data sources will be addressed through seven (7) planned structured data submissions, covering the following categories: (1) sales data, (2) pricing data, (3) customer lists, (4) win/loss data, (5) market share estimates, (6) financial data, and (7) product feature matrices. These submissions will cover both Pinnacle and Meridian data, with the Pinnacle-side data to be coordinated with HPS.
B. Date Range
General Date Range for Document Collection. The general date range for document collection across all custodians and data sources is January 1, 2020 through the date of final collection (expected to extend through June 2023 and potentially into July 2023 for supplemental collections). This date range was selected to capture the following key periods and events:
• The period beginning approximately one year prior to Solara's acquisition of Meridian in November 2020, during which preliminary investment evaluation, competitive assessments, and market analyses would have been conducted;
• The full period of Solara's ownership and management of Meridian from the November 2020 acquisition through the present, encompassing competitive dynamics, product development decisions, pricing changes, and customer acquisition and retention activities;
• The development and launch of Meridian's analytics module, which is at the center of the FTC's horizontal overlap concerns;
• The Pinnacle acquisition process from initial sourcing through Merger Agreement execution and HSR filing; and
• Current market conditions, competitive dynamics, and the parties' respective business operations as of the date of collection.
The January 1, 2020 start date aligns with the Second Request specifications' lookback requirements and is consistent with the date range typically expected by FTC Mergers IV Division staff in transactions of this nature.
Narrower Date Ranges for Certain Specifications. Some of the forty-seven specifications contain narrower temporal requirements. For example, specifications relating specifically to the Pinnacle acquisition process (e.g., specifications requesting deal-related communications, banker presentations, Investment Committee memoranda, and integration planning documents) may require documents only from January 1, 2022 forward. These specification-specific date ranges will be identified and applied during the search term development phase (described in Section VI below) to optimize the review process while ensuring full compliance.
Board / IC Materials. Notwithstanding the application of search terms and specification-specific date filtering to certain document populations, the team will perform a full collection of all Investment Committee materials and board materials (including Meridian board materials) from January 1, 2020 through the present, regardless of search term hits. This approach reflects the FTC's established expectation that board-level and investment committee-level documents are collected and produced comprehensively, without the application of search term filtering.
C. Collection Procedures
The document collection process will proceed in three phases, as described below.
Step 1 — Custodian Notification and Litigation Hold. Litigation hold notices were issued to all eighteen (18) identified custodians on May 30, 2023, the day immediately following the issuance of the Second Request. The litigation hold notices directed each custodian to preserve all potentially responsive documents, including electronic communications, files, text messages, and any other materials that may be relevant to the Second Request specifications. The notices specifically instructed custodians not to delete, destroy, modify, or alter any documents or data within the scope of the hold, and to suspend any auto-delete or retention policies that might result in the destruction of potentially responsive materials.
Follow-up custodian interview questionnaires have been distributed to all eighteen custodians and are expected to be completed by June 12, 2023. The questionnaires are designed to elicit detailed information about each custodian's document creation and storage practices, including the specific data sources they use, any personal devices or accounts used for business communications, and any unique or non-standard storage locations where responsive documents may be found.
Step 2 — Forensic Collection. Keymark Document Solutions LLC has been engaged to perform forensic collections from all identified data sources. Keymark's Project Manager for this engagement is Daniel S. Fong, and Keymark's offices are located at 7600 Leesburg Pike, Suite 320, Falls Church, VA 22043.
All forensic collections will be performed using industry-standard forensic tools (including, as applicable, Penrose Technologies, Severin Software, and platform-specific eDiscovery export tools) to maintain full metadata integrity. The following protocols will apply to all collections:
• All collected data will be hashed at the point of collection using both MD5 and SHA-1 hash algorithms to establish and document the authenticity and integrity of the collected data.
• Chain-of-custody documentation will be maintained for every collection event, recording the date, time, location, data source, custodian, collecting individual, and hash values for the collected data.
• Collections from on-premise sources (e.g., Meridian's file server) will be performed on-site by Keymark personnel or under their direct supervision.
• Collections from cloud-based sources (e.g., Ashgrove Software, Meridian Solutions, box, Crestline Software) will be performed remotely using the platforms' native eDiscovery and data export functionalities, supplemented by Keymark's processing tools as necessary.
Step 3 — Transfer to Hosted Review Platform. All collected data will be transferred to Keymark's hosted Crestline Technologies environment for processing, de-duplication, filtering, and review. Data transfers will be conducted via encrypted channels (AES-256 encryption in transit), and Keymark's hosting facility meets SOC 2 Type II compliance standards, ensuring appropriate controls over data security, availability, and confidentiality. Upon ingestion into Crestline Technologies, the data will undergo processing (including text extraction, metadata extraction, and de-NIST filtering to remove known system files), de-duplication, and file-type filtering as described in Section V below.
V. Estimated Collection Volume and Processing
A. Estimated Collection Volume
Based on preliminary volume estimates provided by Solara GP and Meridian IT departments, as well as Keymark's initial assessment of the identified data sources, the team estimates that the total volume of documents collected across all eighteen (18) Solara-side custodians will be approximately 1,240,000 documents (1.24 million). This estimate encompasses all data source types and is subject to refinement based on the results of the custodian interview process and the forensic collection itself.
The estimated breakdown by data source type is as follows:
These estimates are preliminary and may increase or decrease based on actual collection results. The email volume estimate includes both parent emails and their associated attachments, counted as separate items. The Meridian Solutions and Teams message estimates include both channel messages and direct messages, with threading preserved during processing.
B. De-Duplication Protocol
To reduce the volume of documents requiring review and to eliminate redundant copies of the same document, the team will implement a global de-duplication protocol across all custodians. De-duplication will be performed at the family level (parent document plus attachments) using MD5 hash values. Under this approach, when an identical document family is found in the collections of multiple custodians, only one copy will be promoted to the review set, with all custodians associated with the document recorded in the metadata for tracking purposes.
Based on historical experience with collections of this nature and the degree of expected overlap across custodians (particularly among the Solara GP deal team, where the same emails and attachments are frequently shared among multiple team members), exact duplicate removal is expected to reduce the total document universe by approximately 30–35%.
In addition to exact de-duplication, the team will utilize Crestline Technologies Analytics to perform near-duplicate identification, with the textual near-duplicate threshold set at 90% similarity. Near-duplicate clusters will be used for prioritization and workflow optimization purposes (e.g., allowing reviewers to batch-review similar documents for consistency), but near-duplicates will not be excluded from the review set. All near-duplicates will remain in the review population and will be individually coded for responsiveness and privilege.
C. Filtering Protocols
The following filtering protocols will be applied to the collected data to further reduce the review population to a manageable and focused set of documents:
Date Filtering. Documents falling outside the applicable date range (January 1, 2020 through the date of final collection) will be excluded from the review set. For specifications with narrower date ranges, specification-specific date filters will be applied during the search term application phase.
File-Type Filtering. System files, executable files, and other non-responsive file types will be excluded from the review set in accordance with standard FTC practice. Excluded file types include, but are not limited to:
• .exe (executable files)
• .dll (dynamic link library files)
• .tmp (temporary files)
• .log (system log files)
• .sys (system files)
• .cab (compressed cabinet files)
• .inf (setup information files)
A complete list of excluded file types will be documented and made available to FTC Staff upon request.
Domain Filtering. Email domains that are clearly non-responsive will be de-prioritized within the review workflow but will not be categorically excluded from the review set. Examples of de-prioritized domains include spam email senders, vendor newsletter distribution lists (e.g., mass-distributed marketing emails from software vendors, industry publications, and similar automated sources), and automated system notification emails (e.g., calendar reminders, IT system alerts, and similar machine-generated messages). The de-prioritization approach ensures that no potentially responsive documents are inadvertently excluded while allowing the review team to focus its initial efforts on the most likely responsive populations.
Search Term Application. Negotiated search terms (to be developed in consultation with FTC Staff as described in Section VI below) will be applied to the collected and de-duplicated document universe to further reduce the review population. Search terms will be applied on a specification-by-specification basis, and documents that do not hit on any applicable search term will be excluded from the review population for that specification, subject to any "sweep" or quality-control review protocols agreed upon with FTC Staff.
Expected Post-Filtering Review Set. After application of de-duplication, date filtering, file-type filtering, and search term filtering, the team estimates that the review set will contain approximately 487,000 documents. This represents a reduction of approximately 60.7% from the initial collected volume of 1.24 million documents. The actual post-filtering volume will depend on the final search terms negotiated with FTC Staff, the results of the custodian interviews, and any adjustments to the collection scope.
VI. Search Term Development
Search terms are a critical component of the Second Request compliance process and serve as the primary mechanism for reducing the collected document universe to a reviewable population of potentially responsive documents. Consistent with standard FTC Second Request practice, search terms will be developed in consultation with FTC Bureau of Competition, Mergers IV Division staff, following the completion of initial custodian interviews and preliminary data analysis.
The team plans to propose an initial set of search terms organized by Second Request specification. The proposed search terms will incorporate the following categories of terms and concepts:
Entity Names and Variants. The search terms will include all relevant entity names and commonly used abbreviations, acronyms, and variants, including but not limited to:
• Pinnacle, Pinnacle Cloud, Pinnacle Cloud Systems, PCS
• Meridian, Meridian Workflow, Meridian Workflow Solutions, MWS
• Solara, Solara Digital, Fund IV, Fund 4
• All known competitors, including Marlowe Asset Management Analytics Corp. (and variants such as Marlowe Asset Management Analytics, VAC), Arclight Data Systems (and variants such as Arclight, ADS), and other competitors identified during custodian interviews
Product-Related Terms. The search terms will include terms relating to the products and services at issue in the investigation, including but not limited to:
• Portfolio analytics, performance attribution, risk modeling, risk analytics
• Order management, OMS, execution management, EMS
• ESG scoring, ESG analytics
• Compliance workflow, trade compliance
Market-Related Terms. The search terms will include terms relating to market dynamics, competition, and market definition, including but not limited to:
• Market share, competitive, competition, competitor
• Pricing, price, discount, rate card
• Switching costs, switching, churn, retention
• Barriers to entry, new entrant, barrier
• Total addressable market, TAM, serviceable addressable market, SAM
Deal-Related Terms. The search terms will include terms relating to the proposed acquisition and integration planning, including but not limited to:
• Acquisition, merger, combination, transaction
• Integration, synergy, synergies, cost savings