2009 M&A Review


New York – When times get tough, the tough go shopping.  2009 was a great environment for bargain acquisitions, as stronger, better financed research providers snapped up smaller firms.

Within the research space, which this review covers, most of the purchase prices would hardly excite investment bankers.  The largest acquisitions were Macquarie’s purchase of Fox Pitt Kelton for just under $150 million (less than 1x revenue), followed by Gartner’s acquisition of AMR for $64 million (1.6x) and Morningstar’s purchase of Logical Information Machines for $51.5 million (2.5x).  Given the buyer’s market, multiples were down.  Most acquisitions seemed to be between 1x and 2.5x revenues, whereas in previous years multiples have averaged 3x and higher.

2009 was a great time for fire sales.  Guidepoint Global is rumored to have picked up Vista Research for around 1x revenues, after S&P had exhausted other sales options.  Thomson Reuters reportedly picked up ASSET4 for a token amount in return for picking up the debt and other obligations.  Concept Capital paid nothing for Washington Research Group, a highly regarded subsidiary of ponzi operator Stanford Group, by simply hiring the bulk of the staff.

Morningstar Inc. was the most active acquirer in the research industry, initiating six transactions during 2009 – two in Canada, one in Australia and three in the US.  The acquisitions enhanced Morningstar’s data and research offerings, as well as its diversification into asset management.  RiskMetrics Group made key ESG acquisitions, purchasing both Innovest and KLD, making it one of the leading ESG research providers overnight.   The 451 Group also expanded aggressively, purchasing both a fundamental research capability in Moss Creek Capital, and expanding its data center coverage in its core IT expertise.

The following is the review by month:


RiskMetrics Group acquired Innovest Strategic Value Advisors, a leading ESG provider for an undisclosed sum, which we believe to have been around $16 million, approximately 2x revenues.  RiskMetrics had a small ESG research capability prior to the acquisition which was integrated with Innovest.


After the collapse of Stanford Financial Group, Concept Capital, a prime brokerage subsidiary of Sanders Morris Harris Group, a Houston-based brokerage firm, picked up the bulk of the Washington Research Group franchise by hiring many of the analysts.  WRG had been a subsidiary of Stanford.  Not all WRG analysts went to Concept, as Greg Valliere, one of the founders of WRG, and Lyle Gramley joined Soleil Securities to be Soleil’s Washington research team.


The 451 Group, an industry consulting firm focused on technology, acquired Moss Creek Capital, a fundamental equity research shop operating out of Dallas Texas. The principal of Moss Creek Capital, Gregg Speicher, CFA is a technology analyst focused on publicly traded software company analysis. The acquisition allowed The 451 Group to add fundamental research coverage within the IT space.

Majestic Research, an independent research company that provides institutional investors primary research based on large commercial databases, announced its acquisition of Rood Research, a healthcare market research firm.

Morningstar, Inc. made two acquisitions during the month, acquiring the global financial filings database business of Global Reports LLC, a provider of online financial and Corporate and Social Responsibility (CSR) reports for publicly traded companies around the world. Morningstar Research Inc., the Canadian subsidiary of Morningstar, Inc., also acquired the equity research and data business of Computerized Portfolio Management Services Inc., a privately owned independent equity research and data firm in Toronto, for C$16.1 million (a little more than $13.3 million in U.S. dollars).


Standard & Poor’s sold its Vista Research expert network business to competitor Guidepoint Global Advisors (formerly called Clinical Advisors).  While official details of the deal were not disclosed, industry insiders suggest the firm was sold for between $10 million and $13 million – considerably less than the purported $40 million that S&P bought the business for in 2005.


InfoExchange, Inc., a research distribution platform that uses data from trade management systems to push relevant research to clients, purchased certain assets of StreetBrains, a distributor and marketer of third party research.  According to Larry Margolis, StreetBrain’s founder and Managing Member, StreetBrains will operate as an operating subsidiary of InfoEx,   providing e-commerce distribution of research reports and an operational platform for research providers facilitating report production, conferences and webinars.

Morningstar Australasia Pty Limited, an Australian subsidiary of Morningstar, Inc. acquired Intech Pty Ltd, a provider of multi-manager and investment portfolio solutions in Sydney, Australia, from IOOF Transition 3 Pty Ltd., a subsidiary of IOOF Holdings Limited.


LinkedIn, a social networking site with over 50 million members, entered into a ‘preferred partnership’ with DeMatteo Monnes LLC, an expert network and full service brokerage firm.  LinkedIn had reportedly been approaching multiple expert networks about similar deals, which is effectively a licensing deal which provides DeMatteo’s research staff with proprietary LinkedIn search tools which are not available to other expert networks.  Other expert networks continue to have access to LinkedIn through its standard capabilities.  Nevertheless, the partnership with LinkedIn signaled DeMatteo’s commitment to the expert network space and willingness to invest to be a market leader.

AOL shut down the Relegence news analytics business it acquired in November 2006.  AOL continues to use the Relegence technology internally as a news engine for its consumer-oriented products, including AOL Money & Finance and its MediaGlow subsidary.  Relegence was acquired by AOL in November 2006, reportedly for between $55 and $65 million.  We estimated Relegence’s revenues were around $8 million at the time.

Toluna, a Paris-based independent online panel and survey technology provider, acquired market research firm Greenfield Online reportedly for $40 million.  Greenfield’s revenues were said to be around $129 million when acquired by Microsoft in 2008 for $486 million.


Gerson Lehrman Group, the expert network with the largest market share, acquired TGR Research, a Paris-based expert network focusing on continental Europe.  Terms were not disclosed.

Morningstar, Inc. acquired a minority equity stake in PitchBook Data, Inc.  Based in Seattle, PitchBook offers detailed data and information about private equity transactions, investors, companies, limited partners, and service providers.


Macquarie Group acquired Fox-Pitt Kelton Cochran Caronia Waller LLC, a specialist investment bank focused on financial institutions with a highly regarded research capability.  Macquarie paid $US 130 million in equity value, plus $US 16.7 million of long-term liabilities.  The acquisition price represented less than 1x revenue (Fox Pitt’s revenues are approximately $170 million.)     Fox-Pitt was purchased from a consortium of private equity investors and management which included J.C. Flowers & Co.  Fox-Pitt was bought by Swiss Re in 1998 and sold to the investor group led by J.C. Flowers & Co. in 2006 for $75 million.

First Tennessee National Bank (FTNB) sold its highly respected equity research division, FTN Equity Capital Markets, to New Jersey-based asset management and merchant banking firm Point Capital Partners, LLC for an undisclosed sum.

ConvergEx, a leading provider of agency execution and commission sharing services to investors, acquired Cogent Consulting LLC, a software development firm specializing in commission management solutions for institutional money managers and broker-dealers. Terms of the transaction were not disclosed.

RiskMetrics Group acquired KLD Research & Analytics for about $10 million in cash.  KLD has about 50 staffers, and the purchase price is estimated around 2x revenues.

The 451 Group, an industry consulting firm focused on technology, acquired The Uptime Institute, a data center trade group that certifies data center professionals and evaluates data centers around the world with its Tier Program. The 451 Group has been rolling up key elements in the IT research and analysis space over the past several years, with the acquisition of Tier 1 Research in 2005 and the Moss Creek Capital earlier in 2009.


Thomson Reuters, a leading media and information company, acquired the business of ASSET4 AG, a Swiss-based provider of Environmental, Social Responsibility and Governance (ESG) information and tools in the continuing consolidation of ESG research providers.  The terms of the acquisition were not disclosed.  ASSET4’s acquisition follows Riskmetric’s purchase of Innovest and KLD, and the merger of Jantzi Research and Sustainalytics.  Swiss based sustainability rating agencies Centre Info and INrate also announced their merger planned for the first quarter of 2010.

Gartner Inc. acquired IT research firm AMR Research for $64 million in an all cash deal (at a multiple of about 1.6 times revenue).  The deal merged two of the top ten IT research firms (AMR weighs in at number 6), though there is a significant gap between Gartner and AMR.   AMR has about 40 analysts, 45 sales reps and revenue of about $40 million (down from $47 million in 2008). Gartner has about 650 analysts, 1000 sales reps and revenue in 2008 was $1.28 billion.

Morningstar Inc. announced two additional acquisitions, including an agreement to purchase Logical Information Machines (LIM), a provider of time series data for the energy, financial and agricultural sectors. The deal was reportedly for $51.5 million, or just over 2.5 times revenue.   Morningstar Research Inc., a Canadian subsidiary of Morningstar, Inc. acquired the Canadian Investment Awards and Gala from Canadian Investment Awards Inc., a privately held firm based in Toronto.  Terms were not disclosed.


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