New York – The acquisition market for research firms specifically and financial information firms generally has picked up in 2010, according to various sources. A recent article by advisory firm Jordan, Edmiston Group (JEGI) says that deal size and multiples of acquisitions involving financial and credit information & technology firms increased to their highest levels in two years. And, as we have reported through the first half of this year, a variety of smaller research related firms have been acquired.
A recent article by Eric Lint, who recently joined Jordan Edmiston from Thomson Reuters and D&B, sizes the market spending on financial and credit information & technology at around $42 billion. The universe of firms includes data, tools and analytics sold into the financial industry as well as credit information sold to corporations. Based on statistics from Outsell Inc., an industry consultant focused on the information industry, the market grew at an 8.4% compound growth rate during 2002 to 2009, but is projected to grow at 3.5% for the period 2010 to 2012.
One of the bellwether transactions during the first half is the pending acquisition of Interactive Data Corp (IDC) by Silver Lake Partners (which also owns Gerson Lehrman Group) and Warburg Pincus for $3.2 billion (4.1x revenues). Another large deal was MSCI’s purchase of Riskmetrics for $1.5 billion (5.1x). Post-purchase, it is unclear if ISS remains a strategic property for the newly combined group. If ISS is spun out, the related ESG research acquired by Riskmetrics will presumably be included.
Other transactions of interest were Thomson Reuters’ purchase of Point Carbon, a leading information supplier on carbon markets, and Bloomberg’s acquisition of New Energy Finance, another information supplier on clean energy markets.
The ESG market continues to be one of the most active areas for consolidation with smaller European based ESG firms INrate and Sustainalytics each announcing mergers with other firms.
Morningstar continued its acquisition binge during the first half, with purchases of RealPoint, a ratings agency focused rating structured transactions, for $52 million (4.3x); Aegis Equity Research, a small Australian independent research firm; Footnoted.org, a blog-oriented forensic research shop; and Old Broad Street Research, a London-based fund research firm.
We also reported the announced acquisition of Epito, an expert network focused on the Nordic region, by Cognolink Ltd, a London-based expert network.
JEDI cites publicly traded information firms, such as Factset, Interactive Data, McGraw Hill, MSCI and Thomson Reuters, which were trading at a median multiple of 3.7x revenues as of June.