Is Yankee Group being prepared for another sale?

Last week’s severe cutbacks at Yankee Group (see here and here) could be an indicator that the firm is simply refocusing on its prime research opportunity or it could mean it is back on the selling block. This would be the fourth change in ownership in this decade if this turns out to be true. Here is a quick timeline:

•  1970 – founded by Howard Anderson
• 1996 August – acquirer Primark ($34m)
• 2000 May – acquirer Reuters Enterprise ($72.5m)
• 2004 May – acquirer Decision Matrix Group, formed by Monitor Clipper Partners (undisclosed)
• 2005 November – acquirer Alta Communications (undisclosed)
• 2008 September – ?

 A sale by Alta would not be surprising as it – like Monitor Clipper Partners – is a private equity firm that buys and sells companies as investments, not to build a larger corporation. If Yankee Group under CEO Emily Nagel Green was not performing to Alta’s expectations, then it would have no qualms about dumping it quickly.

This would no different than Monitor Clipper Partners (MCP) selling Yankee after Gartner snatched META Group out from under Yankee (who reportedly had a signed contract in place to acquire META). This move by Gartner thwarted MCP’s plan for using Yankee as the core of a market roll up strategy. Once the then second largest IT end-user advisory firm was gone, MCP decided that a roll up based on many – dozens? – of boutiques was not worth the effort. Thus they said “Good bye Yankee.”

There have been other indicators that the current situation might be preparation for Alta to unload Yankee. For example, SageCircle has gotten several reports that as recently as a month ago, recruiters working were talking to top analysts and analyst managers about joining Yankee. Obviously, Yankee executives were thinking about expansion at that point, not contraction. However, it is not unusal that a private equity firm would surprised the executives of a portfolio company with orders to cut costs quickly in order to make the company more attractive to potential buyers.

Who might be likely buyers for Yankee? It is uncertain at this point. TechWeb might be a candidate even after its acquisition of Pyramid Research (see here) if the overlaps could be managed and the price was right. It does not seem likely that Forrester, Gartner or IDC would be interested. Informa – which owns Datamonitor which owns Ovum – could be a possibility, again if overlaps are manageable. Or there could be a totally unexpected player that takes everybody by surprise such as when MasterCard acquired Tower Group from Reuters Enterprise in May 2004.

SageCircle Technique:

• Companies signing contracts with Yankee should try to insert terms and conditions into contracts that permit monthly/quarterly payments and termination of the contract if key analysts depart. This is not likely to be successful as analyst firms are loathe to agree to T&Cs of this nature
• AR teams should carefully monitor the status of Yankee’s market influence and re-rank Yankee analysts accordingly. Do not hesitate to lower the rank of Yankee analysts even if it means dropping them to Tier 2 or 3 status
• AR teams should monitor the status of key Yankee analysts and be prepared to act quickly (e.g., terminate a planned analyst consulting day, aka SAS day) should key analysts depart
• Follow the path of departing Yankee analysts who may have been key in your market. They are likely to surface in other firms… lend a helping hand today and it will remembered when they are in their new firms

Bottom Line: This is a tricky time for Yankee Group. As long as there is uncertainty about its future, clients will be reluctant to renew contracts and prospects leery about signing new contracts. This could cause a downward spiral leading to new analyst layoffs leading to more clients not renewing and so on. The current and any future analyst layoffs will lead to a diminishment of Yankee’s influence, which decreases the motivation of some vendors to buy Yankee services. Competing analyst firms are no doubt seeking to hire not only recently departed analysts, but also remaining good analysts and top sales reps.

Question: Analyst firms – IDC and Ovum have already started interviewing former Yankee analysts, are you? AR teams – Do you have formal processes in place that will permit you to react quickly if key analysts depart?

Advertisement