• Recent Posts: Influencer Relations

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    Do the IIAR awards simply reward large firms?

    Do the IIAR awards simply reward large firms?

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    Unmaking fruit salad: 6 ways to help analysts segment markets

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    Control in Analyst Attitude Surveys

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    Time for a new direction in AR measurement?

    Time for a new direction in AR measurement?

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Acquisitions continue to remake the analyst landscape – Looking ahead to 2010

icon-crystal-ball.jpgThis post is one in a series where SageCircle pulls out the crystal ball and looks ahead to what happens in the analyst ecosystem in 2010. See below for links to all posts in this series.

It does not take a magical crystal ball to predict that there will be acquisitions in the analyst market. Acquisitions have always been a business tool of analyst firms. However, there are some potentially interesting developments on the acquisition front for 2010 and beyond.

Roll ups to take on Gartner and Forrester – One of the ways that Gartner was able to achieve its market dominance was 60+ acquisitions in the 1990s under the leadership of then CEO Manny Fernandez.  Since then there has been only one serious attempt to use a roll up strategy to develop a competitor to Gartner and Forrester. That was by Monitor Clipper Partners in 2004, who attempted to buy META Group to combine with the earlier acquisition of Yankee Group to form the core of a new broad-based major analyst firm. This plan was derailed by Gartner CEO Gene Hall’s smart and strategic grab of META. In stark contrast to the last ten years, 2010 could see three firms use a roll up strategy: Corporate Executive Board, IDC (for Insights units) and Ovum-Datamonitor.

Mid-sized firms get gobbled up – As Gartner’s acquisition of AMR Research demonstrates, being a mid-sized firm with a price tag in the tens of millions dollars does not deter determined acquirers. There are a number of potential acquiring firms with the financial resources to buy a mid-sized firm. One firm likely being wooed by potential acquirers is the Burton Group, which has a solid reputation, desirable research coverage, a sales force, and a client base that includes enterprises and government agencies.

Forrester continues adding resources for marketing professionals – Forrester continued its push deeper into research and services relevant to marketing professionals with its recent acquisition of Strategic Oxygen. In 2010, Forrester is likely to continue adding assets for its Marketing and Strategy Professionals Client Group. While this strategy is certainly reasonable because it helps Forrester stay out of the path of Gartner, it risks diluting its end-user advisory brand.

Boutiques combine to achieve scale or simply survive – There have been relatively few mergers between boutique analyst firms in the last decade. Mostly boutiques have been purchased by much larger firms to fill research or geographical gaps. However, 2010 might see boutiques combine in order to develop a larger scale of offerings and sales muscle – necessary to prevent from being crushed by one of the larger firms. In addition, boutiques that rely on vendors for business will still be experiencing financial difficulty due to the lingering effects of the recession.  This might be offset by smart mergers and the combining of resources and client bases. Ironically, boutiques that grow by acquisition would then become attractive to the large firms who could then roll them up. 

Bonus and Quirky Possibility: IDG acquires a public company as a way to spin off IDC – This is the least likely, but not completely improbable M&A event of the year. The technique is known as a reverse takeover or reverse merger. A private company takes over a public company so that the acquiring company does not have to go through the expense of an IPO to become publicly held. IDG is owned by billionaire founder-CEO Pat McGovern. McGovern is in his early 70’s so it is not inconceivable that he could be thinking ahead toward retirement and the need to liquidate IDG. The public company acquired as the shell company for this technique would not have to an analyst firm like Forrester or Gartner, just any public company. While amusing to imagine the effect on the analyst ecosystem of such a move, this really has a very low probability.

SageCircle Technique:

  • Enterprise and vendor research contract managers need to have processes and policies in place to handle a merger or acquisition of a key research provider, mid-sized or boutique
  • Vendor analyst relations teams should build into analyst ranking frameworks the flexibility to handle M&A contingencies which could impact an analyst’s relevance and influence

Bottom Line: Acquisitions will be a staple of 2010, with the analyst landscape being roiled by major deals. All members of the analyst ecosystem need to have plans in place to deal with this volatile environment.

Question: Who do you think will be acquired in 2010? Which company will be an unexpected acquirer of analyst firms?

Looking ahead to 2010 Series

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