New York, NY – In a surprising move, Riskmetrics — a risk management firm and owner of influential proxy advisory provider ISS — purchased well-known forensic researcher, CFRA. Previously, CFRA was majority owned by venture capital firm, TA Associates.
TA Associates originally acquired a majority of CFRA in November 2003 for $60 million, with the view of using the firm as a platform to roll up other independent research firms. Unfortunately, this strategy never really came to fruition as uncertainty around soft dollars stalled the growth of many independent research firms.
The CFRA acquisition follows closely on the heels of RiskMetrics’ purchase of Institutional Shareholder Services Inc. (ISS) for $553 million in cash and stock in January of this year. ISS is the world’s leading provider of corporate governance and proxy voting solutions to the institutional investor community.
In recent months, Riskmetrics has been seen shopping for an investment banker as part of a process to assess whether the company should go public. The CFRA acquisition could be part of an overall move to make the combined entity even more attractive to public investors. Prior to the CFRA acquisition, the combination of Riskmetrics and ISS produced more than $200 million in annual revenue.
Strategically, the CFRA purchase is quite interesting as it enables Riskmetrics to build a strong franchise in a number of areas, including risk management data and tools, proxy advisory services, and forensic, environmental, social, governance, legal and M&A research. The CFRA team is expected to retain its brand name and independence.
In the wake of the acquisition, Richard Leggett, CEO of CFRA will head up the ISS Governance unit, which includes both CFRA and ISS in an effort to integrate the extensive research efforts of both firms.
The transaction is expected to close by late July.