Alternative Data M&A is Heating Up: Looking Back and Ahead

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The following guest article was written by Mikheil Shengelia, Research Analyst at Eagle Alpha, an alternative data aggregation platform that also provides supporting advisory services for data buyers and vendors.

New industries are typically fragmented with numerous small players competing for market share. Industries then consolidate as they become more mature. According to A.T. Kearney’s study, all industries go through a consolidation life cycle which consists of five stages – opening, plateau, concentration, dominance, and reopening. Every company in every industry goes through these stages or disappears.

Increased competition, changing regulations, new technologies, and increasing customer sophistication is putting pressure on today’s technology leaders and alternative data vendors. Companies would mostly pursue mergers and acquisitions to gain scale advantages and accelerate growth. A size advantage often lowers costs leading to competitive advantage and to competitive price setting. 

In an interview with Eagle Alpha, Ed Lavery, VP of Investor Intelligence at Similarweb, a web analytics company specializing in web traffic and performance, commented on the M&A activity and predicted consolidation in each alternative data category: “I do think the larger data buyers will continue to aggregate more datasets to increase their coverage and accuracy of their existing offering. These same data vendors will continue to widen the moat of their niche, and mass market buyers will therefore have a much more limited pool of vendors to purchase from, each with their own specialty and focus.” 

Our 2022 Alternative Data Report: Year in Review, out on December 15th, will include industry consolidation trends, highlight regulatory developments, the ESG trend, transaction data disruptions, adoption within private markets, and the evolution of alternative data aggregation to platform and data delivery-based hubs.  Request report here.

In this article, we highlight several mergers in the alternative data industry over the years and present exclusive commentary from industry leaders. 

Nasdaq’s Acquisition of Quandl: The Rising Tide That Lifted All Ships

The exchange group’s decision to acquire Quandl in December 2018 meant that Nasdaq was revamping its overall company strategy and expanding beyond traditional services of listings and into data and technology. Nasdaq’s Analytics Hub included 25 datasets at the time, and it was integrated with Quandl’s platform consisting of 350 alternative datasets.

Nasdaq fully integrated Quandl and later introduced its Data Link product, a centralized platform that provides access to more than 250 datasets. Other notable acquisitions in recent years include Puro.earth, a leading marketplace for carbon removal instruments, and Metrio, an ESG analytics and reporting services vendor. 

NielsenIQ’s Acquisitions 

Nielsen Holdings spun off its consumer data unit in 2020 which was acquired by private equity firm Advent International. The newly formed company is now known as NielsenIQ and it made two acquisitions in September 2021 – Data Impact and Rakuten Intelligence – to accelerate growth of its e-commerce and omnichannel measurement solutions.  In order to further expand its coverage and enter new markets, NielsenIQ acquired Foxintelligence, an e-commerce measurement and consumer data analytics company based in Europe.

Similarweb’s Acquisition of Embee 

In November 2021, Similarweb acquired Embee, a San Francisco-based mobile insights provider, to extend its user datasets. Embee’s patented technology was designed to provide end-to-end research panel recruitment, measurement, rewards, and retention within a signle application. 

“Embee’s behavioral data and digital measurement approach — backed by a large-scale metered panel of highly engaged, opt-in users — enables Similarweb to strengthen its data edge in digital measurement and improve its mobile app intelligence offering. The granular insight into mobile app usage that Embee enables is extremely valuable across a wide variety of industries and use cases. The unique Embee panel positions us to continuously introduce new market research capabilities with differentiated mobile insights” – said Ed Lavery, VP of Investor Intelligence at Similarweb. 

In an interview with Eagle Alpha, Ed also made predictions about data buyers going forward: “In reality, as alternative data is more widely adopted, investors won’t need so many data sources. The biggest consumers of alternative data today (c.50 funds) will continue to look for variety, but the mass market will look for simplicity. If a handful of data sources can tell 80% of the story, then that will be sufficient for most buyers. Going forward, more and more buyers are going to enter the market, and there is going to be an increasingly large number of investors with limited or no data sophistication. There is going to be an increasing amount of expectation from investors for more of the work to be done by the data vendors – i.e cleaning, finding the signal, integration etc.”

Consumer Transaction Data

There have been several developments in the consumer transaction space over the past year with some vendors having data disruption issues from a third-party channel partner. Vendors are now competing for market share and growing via acquisitions and partnerships.

In an interview with Eagle Alpha, Jonathan Chin, Co-Founder and Head of Data & Growth Strategy at Facteus, a consumer transaction data provider, commented on recent developments in the space: “The industry has seen a lot of groups selling the same or very similar products. Anytime you see that, consolidation could or should happen. It will be interesting to see how it plays out as many of the competitors have overlapping customers. Companies will have to make hard decisions around which products to support following an acquisition.”

In January 2022, Facteus announced the acquisition of 1010data’s Equity Intelligence business. Jonathan Chin explained the move: “Prior to the 1010data acquisition the Facteus data panel was heavily skewed toward debit cards and we had been actively onboarding new banks to add credit cards. The acquisition allowed us to accelerate the incorporation of credit cards into all the Facteus products. The addition of credit cards has enhanced our coverage and accuracy making Facteus transaction data products one of the top performing alternative data sets in market. We also benefitted from seeing their different approaches to normalization and productization. Every choice in product development has multiple right-answers, so seeing how and why they made their choices allowed us to hone in on our own value prop.” 

It was also announced that Facteus and 1010data were planning to collaborate on retail and brand insights. Jonathan Chin highlighted that this would help Facteus introduce new products targeted towards fundamental investors: “Opening our reach to retail and brands has pushed us to broaden our tagging coverage and build more data interfaces for non-technical users. These non-technical interfaces, we think, will play a big role in opening the fundamental investor market. In many ways, brands and fundamental investors have similar thought processes around uncovering the real drivers of market share. We see far more overlap in these deeper analyses than we do in just the topline, “call-the-quarter” work that transaction data is known for.” 

In May 2022, Consumer Edge completed the acquisition of Qentnis, a European transaction data provider. This deal enables Consumer Edge to expand its alternative data suite and include over 3.5 million bank accounts with history to 2016. Qentnis covers consumer transaction panels in the following European countries: Austria, Belgium, France, Germany, Italy, the Netherlands, Poland, Slovenia, Spain, and Sweden. They did not have good UK coverage, but Consumer Edge had quite a strong UK panel. Qentnis was already in the market at the time and had some large systematic funds testing the data. The combined datasets have given Consumer Edge a very strong position as a single dataset with both US and pan European coverage.

S&P Global’s Acquisition of IHS Markit 

In February 2022, S&P Global announced its acquisition of IHS Markit to provide combined cross-sector, fundamental, and alternative data with workflows and solutions across its expanded customer base. S&P Global’s marketplace now includes a variety of data sources including bill of lading data, well logs, ship movements, and supply chain trends.  

This deal needed to pass the EU Merger Regulation and be approved by the European Commission. However, the approval was conditional on the divestment of businesses in commodity price assessments and financial data. Other notable acquisitions by S&P in recent years include climate risk analytics provider The Climate Service, emerging technology data and intelligence provider 451 Research, and AI solutions provider Kensho

FactSet’s Acquisition of CUSIP Global Services 

In March 2022, FactSet completed the acquisition of CUSIP Global Services from S&P Global. The deal expanded FactSet’s role in the global capital markets as it now partners with American Bankers Association which launched the CUSIP system back in 1968. Other notable FactSet acquisitions include Revere Data, an industry taxonomy, and supply chain relationships data provider, and Truvalue Labs, an AI-driven ESG data vendor.

Other Notable Deals

  • Comscore acquired Shareablee, a social media data provider who built a taxonomy of over 20 million publishers, advertisers, and content creators.
  • Employment data vendor Burning Glass Technologies merged with Emsi to create a combined entity called Lightcast.
  • ExtractAlpha acquired Estimize, an alternative data vendor providing crowdsourced financial estimates.
  • AlphaSense acquired Sentieo, a research platform providing financial, social, news, web traffic, and app usage data.
  • Tegus acquired Canalyst, a financial models and company benchmarking data provider.
  • TransUnion acquired the financial services business unit of Verisk.
  • YipitData purchased Edison Trends, a well-established email receipt vendor.

Conclusion 

Early evidence shows that industry consolidation is happening across alternative dataset categories, including employment, web traffic and consumer transaction. Further market moves will of course be dependent on demand from data buyers who increasingly view alternative/external data as part of the investment process.

Our 2022 Alternative Data Report: Year in Review, out on December 15th, will include industry consolidation trends, highlight regulatory developments, the ESG trend, transaction data disruptions, adoption within private markets, and the evolution of alternative data aggregation to platform and data delivery-based hubs.  Request report here.

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About Author

Mike Mayhew is one of the leading experts on the investment research industry. In addition to founding Integrity Research, Mike is on the board of directors of Investorside Research Association, the non-profit trade association for the independent research industry, and a frequent speaker on research industry trends and developments. Mike has over thirty years of research industry experience. Email: Michael.Mayhew@integrity-research.com

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