Bellwether Research Valuations Reached New Highs in 2021

By Sanford Bragg January 14, 2022

According to analysis prepared exclusively for Integrity Research by D.A. Davidson’s Technology Investment Banking group[1], valuations for large publicly traded research and information firms registered record revenue and earnings multiples during 2021.  

Valuations for the bellwether stocks, which fell to 4.5x trailing revenues in March 2020, have steadily recovered and ended the year at 7.6x above current year revenues, a new record for the group. The year-end earnings multiple for the information companies of 23.9x current EBITDA tops the pre-pandemic high of 20.6x.  Earnings multiples have greatly improved from their pandemic low of 15.4x.   

Sources: PitchBook, D.A. Davdison

D.A. Davdison has prepared these special valuation benchmarks for the investment research industry in collaboration with Integrity Research Associates. The benchmarks monitor the valuations for publicly traded information companies that also offer investment research-related information services.  The ‘trim mean’ metric used to calculate averages excludes the highest and lowest values from the calculation.

Ken Marlin, Vice Chairman of D.A. Davidson’s Tech Investment Banking group, cautions that averages can be misleading and that no one multiple or combination of multiples should be used as a predictor of the future value of any company.  “Growth rates – which often help drive value – may include acquisitions, while EBITDA profit margins may be skewed for a variety of reasons including currency fluctuations,” he said.

Fourth quarter 2021 revenue and EBITDA multiples

Revenue multiples during the fourth quarter of 2021 ranged from 2.3x estimated 2021 revenues for Forrester Research, a global industry research and advisory firm, to 14x current revenues for rating agency/information supplier S&P Global.  The median value was 6.4x current revenues and 5.7x estimated 2022 revenues.

S&P Global (14x), Moody’s (12.7x) and IHS Markit (12.5x) enjoy the highest current revenue multiples among the firms tracked. Removing these three firms from the public company set would result in an arithmetic average EV / revenue multiple of 5x 2021 estimated revenues, which, although still high, might be closer to a representative benchmark for research firms.

 Sources: PitchBook, D.A. Davdison

EBITDA valuations in the fourth quarter ranged from 8.8x current earnings for consumer data provider The Nielsen Company to 33.7x forward earnings for Morningstar.  The median values were 23.7x 2021 EBITDA and 23.5x on a forward basis.  Excluding the three highest values gives an average current EBITDA multiple of 18.4x.

Growth in 2022

Analysts project slower revenue growth for the bellwether information companies in 2022, with median estimated revenue increases at 8.9%, down slightly from the estimated 10.1% growth in 2021.   “Most of these firms have significant recurring subscription businesses, so revenue tends to be fairly stable,” commented Marlin.       

Cautions on multiples

Since most investment research businesses are either privately held or vertically integrated within broker-dealers, selecting publicly traded bellwethers for investment research is a challenge. All the firms selected offer research services but, in many cases, research may be a minority component of overall business.

Note also that the valuation multiple of a large publicly traded firm that is a leader in its niche may not be a valid comparable for assessing the value of smaller firms or those that are not market leaders. As a result, valuations for smaller privately held research firms may differ markedly from those implied by these multiples.

D.A. Davidson Companies is an employee-owned financial services firm offering a range of financial services and advice to individuals, corporations, institutions and municipalities nationwide. Founded in 1935 and headquartered in Montana, with corporate offices in New York City, Denver, Los Angeles, Portland and Seattle, the company has approximately 1,400 employees and offices in 28 states.

[1] D.A.Davidson’s investment banking division is a full-service investment bank that offers comprehensive financial advisory and capital markets expertise. D.A. Davidson’s technology investment banking group has deep understanding of the investment research sector as well as application software, financial technology, infrastructure software, vertical software, technology-enabled services, digital infrastructure, internet and digital media, and data and analytics.  Together with its European strategic partner, MCF Corporate Finance, D.A. Davidson originates and executes transatlantic M&A transactions under the common brand of D.A. Davidson MCF International. Nothing contained herein should be construed as a recommendation to purchase or sell any security. The information herein is not fully comprehensive, nor does it consider specific objectives, circumstances or needs of individual recipients. For more see

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