Last week, Chicago-based investment research, data and analytics firm, Morningstar, Inc. agreed to acquire Seattle-based Pitchbook Data, a provider of private transactions data for $180 mln.
Description of the Deal
Morningstar’s offer of $180 mln is for the 80% of Pitchbook Data that it doesn’t already own – valuing the overall company at $225 mln. Morningstar was an early investor in Pitchbook Data, investing $1.2 mln in the firm’s $4.25 mln Series A Round in 2009, and investing another $10 mln in the firm’s Series B round in January 2016.
PitchBook Data was founded in Seattle in 2007 by financial analyst John Gabbert as a firm that tracked hard-to-find private equity deal data. Since its founding, the company expanded into producing research and collecting data on venture-capital deals, IPOs and mergers and acquisitions.
Morningstar President Kunal Kapoor, who has been on PitchBook Data’s board of directors for four years, explained the acquisition, “Both Morningstar and PitchBook share the goal of bringing transparency to the investment landscape, and PitchBook is in a great position to continue its strong growth trajectory as private markets and private companies are areas of rapidly growing investor interest. Data has always been Morningstar’s sweet spot, and we look forward to working with PitchBook to help investors and advisors better understand and navigate this evolving area of the market.”
Founder and CEO of Pitchbook Data, John Gabbert noted, “I reached out to Morningstar as a potential investor seven years ago because I admired the company’s entrepreneurial spirit and innovative products. Joining forces with Morningstar will help us enter into our next stage of growth, including developing the next-generation version of our award-winning data and software platform, investing in our world-class sales and customer support functions, and expanding our business in Europe and Asia.”
Based in Seattle, PitchBook Data generated $31.1 million in revenue for the trailing 12 months which ended June 30, 2016. The company currently employs more than 300 employees located in Seattle, New York, and London. The two companies expect the transaction to close in the fourth quarter of 2016.
Morningstar’s acquisition of Pitchbook Data should come as no surprise to readers of ResearchWatch, as we noted this was a likely outcome given Morningstar’s two follow-on investments and Pitchbook’s strong revenue growth. The only surprise is that Morningstar decided to acquire the remaining 80% of the firm so quickly after its Series B investment.
Strategically, Pitchbook Data is a perfect addition to Morningstar’s extensive investment data and research business. Morningstar collects data and provides analysis on public companies and investment vehicles around the world, while Pitchbook Data focuses on the private investment marketplace in the US. It seems like a deal made in heaven. Clearly, Kunal Kapoor, Morningstar’s new CEO starting in January of 2017, couldn’t wait to start making his mark on the firm. We wouldn’t be surprised if Morningstar doesn’t become a more acquisitive firm in the next few years than it has been recently.