New York, NY – News last week that Moody’s Corp. had inked a deal to acquire Ecomony.com reflects the growing impetus of research companies to consolidate in the current environment. The combined company will be called Moody’s Economy.com and will provide greater economic content for Moody’s. The company will be managed by Economy.com’s President, Paul Getman and Chief Economist Mark Zandi, who will report to Moody’s Investor Service’s Senior Managing Director, Mark Ameida. Moody’s paid $27 million in cash for Economy.com
The team at Integrity Research notes that companies in the economic research space have been under pressure to change their business models to focus their analysis more closely on downstream services, such as investment ideas and fixed income and equity strategies. This move is seen, in part, as a response to this market force. Since Economy.com has a strong web-based presence, it is a natural for consolidation. As for Moody’s, the deal strengthens and extends its reach into the macroeconomic sphere. Perhaps more importantly, Moody’s will gain from the strong demographic analysis of Economy.com. Arguably, demographics may be one of the greatest forces in determining corporate health and investment patterns in the coming decade.
This extends to the recent trends towards reducing pension and healthcare benefits to employees across the board. For example, part of GM’s retrenchment this week is related to the expense of that company’s healthcare and pension costs. For every active worker at GM, there are presently 2.5 retirees. Substantive analysis of demographics, particularly age demographics, should help Moody’s in assessing future health of companies by looking at the potential liabilities associated with the benefits these companies offer to employees.
More generally, it is expected that this deal is the tip of the iceberg in terms of the extent of consolidation expected in the research space in coming years.