Research M&A Activity Likely to Continue in 2009


New York, NY – In recent weeks, the team at Integrity Research has predicted that the current meltdown in the financial markets is likely to have a severe negative impact on the investment research industry in 2009.  Consequently, we expect a number of sell-side and independent research providers will be forced to shutter their operations next year as buy-side firms slash their spending on external research.  However, some research providers might be lucky as a few see the market downturn as an opportunity to acquire talented analysts, strategic products, or interesting businesses.

The Acquisition Trend Continues in 2008

Of course, some might conclude that the M&A trend we expect to see in the research industry in 2009 is merely an extension of the activity seen in recent years.  In fact, according to our data, approximately 11 transactions took place in the investment research and related industries in 2007.  However, this total was eclipsed in 2008 as at least 16 transactions have taken place so far this year.  The following are some of these deals.

January, 2008

Goldman Sachs takes minority stake in medical support tool and primary research provider Epocrates.  Adds the firm to its Hudson Street platform.

February, 2008

Goldman  Sachs takes a minority stake in stock market liquidity research provider TrimTabs Investment Research.  Adds the firm to its Hudson Street platform.

March, 2008

Goldman Sachs takes a minority stake in quantitative research provider QSG.  Adds the firm to its Hudson Street platform.

UBS takes a minority stake in research advisory services provider Integrity Research Associates.

State Street Corporation acquires global commission management software provider Financial Sockets.

April, 2008

Coleman Research Group acquires Philadelphia-based Endowment Capital Group’s research management software (RMS) system called Clio.

May, 2008

London-based investment bank, Noble Capital, acquires independent research firm Clear Capital.

Goldman Sachs acquires minority stake in China-based research provider, JL McGregor.  Adds the firm to its Hudson Street platform.

Charlotte-based private equity firm, Carousel Capital acquires fixed-income data provider Mergent Inc. and UK-based index calculation company, Kinetic Information Systems from Xinhua Finance Limited.


Global information provider IHS, Inc. acquired the product portfolio of Divestco USA Inc., a strategic provider of comprehensive data and analytical tools for the oil and gas industry.


Independent investment bank Broadpoint Securities Group acquires independent research provider, American Technology Group (AmTech).

Global information provider, IHS Inc. acquired Waltham-based economic data, analysis, and consulting firm Global Insight, Inc.


Proxy analysis firm Glass Lewis acquires independent policy research firm Washington Analysis from Xinhua Finance Limited.

Medley Global Advisors acquires independent macroeconomic and policy research firm G7 Group from Xinhua Finance Limited.

Investment bank, UBS acquires a minority stake in global governance research provider Governance Metrics International (GMI).


Mutual fund rating and investment research provider Morningstar acquires UK-based Tenfore Systems, Ltd., a provider of real-time market data and financial workstations.

Looking for Opportunities in Down Markets

Despite the strong M&A trend seen in the research industry in recent years, we suspect that some buyers will be looking to pick up research companies on the cheap as buy-side investors reduce their spend on external research in 2009.  In fact, the team at Integrity has already been approached by a number of potential buyers who have expressed interest in having us identify specific types of research firms they might want to acquire.

Given the frozen credit markets, we doubt that many financial buyers will be looking to purchase sell-side or indie research firms.  However, we would not be surprised to see strategic buyers looking to strengthen their positions in existing markets or try to expand into new and important markets – particularly if they feel they can leverage their brands, distribution, and operational infrastructure with these acquisitions.


Likely Deals in 2009?

So, which firms are likely to be involved in mergers, acquisitions, investments, or divestitures of research providers in the coming year?  A few names and/or sectors seem probable.

Xinhua Finance:  Xinhua has been divesting itself of its research related properties in 2008.  We suspect this will continue in 2009 with firms like Ford Equity Research, Market News Service, and Stone McCarthy Research likely to be sold.

Goldman Sachs: Goldman Sachs has been making minority investments in numerous research providers over the past few years.  While we expect the pace of these investments to slow, we would not be surprised to see Goldman make a few more deals in the coming year.

UBS:  UBS made minority investments in both GMI and Integrity Research in 2008.  Given our (Integrity’s) relationship with UBS, we cannot comment about any potential M&A activity that the firm might be involved in during the coming year.

ISI:  Historically, ISI has hired well-known analysts rather than paying a premium to acquire an entire business.  However, we would not be surprised if Ed Hyman decides to take advantage of the difficult market conditions that are likely to exist in 2009 to acquire specific research providers.

Morningstar: In the past few years, Morningstar has been building its franchise by acquiring international financial data and information businesses.  We suspect the firm will continue to expand its business through internal growth and targeted acquisition.

IHS: In the past few years, IHS has acquired firms like John S. Herold and Global Insight.  We suspect IHS will be opportunistic and acquire strong brands in the aerospace, defense, automotive, construction, electronics, and energy industries.

Expert Networks: Currently there are close to 30 stand alone expert network providers in existence, with a few more firms offering specialized expert network products alongside their primary offerings.  Given this, we would not be surprised to see a few firms be sold, take investment capital, or merge with other more established players.  S&P’s Vista Research unit has been rumored to be for sale for quite some time.  We would also not be surprised to see Gerson Lehrman acquire other primary research providers.

Investment Strategy:  There are over three dozen investment strategy firms in existence today.  However, a number of firms have been built on the brands of individual economists or strategists – a number of whom are getting on in years.  Consequently, we would not be surprised to see a few of these firms try to sell their businesses. The question is who would be willing to acquire firms that have been identified so specifically with celebrity analysts.

Fundamental Research: As we have mentioned in the past, we suspect that many fundamental research firms will experience considerable pressure in 2009 as buy-side investors generate considerably less equity commissions than they did in 2008.  This leads us to conclude that there could be considerable mergers and consolidations in this segment as research providers attempt to rationalize their infrastructures and leverage their distribution capabilities.


As we discussed in the article above, the research business has seen a growing number of mergers, acquisitions, and investments in recent years.  However, we suspect that this trend will grow in the coming year as a number of firms face extreme market pressure and as a number of buyers look to take advantage of this fact.  Unfortunately, we also expect that a number of research providers will not be able to find acquirers to save them from the severe downturn that we project will take place in 2009.  Consequently, we anticipate both a large number of M&A transactions and a large number of research providers shuttering their doors for good in the coming year.


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