New York – Yesterday, 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 weds 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.
As with most M&A reasoning, the two sides must see clear benefits to the acquisition. For AMR Research, the benefits are clearly greater access to global markets. While AMR has made progress selling around the world, Gartner’s global presence will be a significant boost to AMR’s sales representation and leads overseas. For Gartner, it is clearly about reducing the direct competition in the space, while adding AMR’s supply-chain capabilities to Gartner’s capabilities. In addition, Gartner is also expected to gain in the area of syndicated research.
AMR Research will maintain its brand, client relationships and products for the foreseeable future.
In the recent past we have heard that AMR has been talking to a couple of other big firms in the space, namely IDC and Forrester. Talk had been that Tony Friscia, AMR’s CEO and Founder, was not in the market to sell. So news of the acquisition is somewhat surprising, given that the multiples in technology deals have obviously been falling for M&A deals in the space.
As deals in the IT research space continue the trend of consolidation, a counter-trend seems to be developing in which talented analysts are setting out to start up boutique and focused research services.