The global information services (IS) industry employs integrated methods to gather, process, communicate and store different types of information for the purpose of improving efficiencies for society and organizations. IS data—which typically covers people, software, hardware and procedures—is used for study, analysis and better decision-making processes.
The IS landscape is comprised of companies that vary in size, including:
- Global multi-billion-dollar firms that cover several sectors
- Firms with hundreds of million of dollars in revenues and more concentrated areas of focus
- Smaller firms that focus on niche markets and specific geographic regions
M&A in the IS Industry
Many large IS companies use regular acquisitions to execute business strategies such as product enhancement, geographic expansion, keeping pace with changing marketplaces, and expansion into adjacent markets. Acquisitions in this sector can also serve as an alternative path to product development, allowing companies to purchase capabilities and content rather than create it themselves. IS companies typically look to acquire content that fits well within their existing offerings.
Synergy and Value
Value through M&A in this industry comes in the form of clear synergies and improved distribution capabilities. This is partially due to the fact that IS content can be used several times at no added cost. After a one-time integration of content and capabilities between the two companies, there is much versatility in how the content can be used. Synergies are especially important to M&A deals when they are part of a business owner’s exit strategy in order to maximize the value of the transaction and fulfill the business owner’s personal objectives and vision for the company.
Consolidation planning is key to company valuations. IS companies do not typically view acquisition targets as stand-alone enterprises, but rather as opportunities to consolidate acquired content into existing platforms, therefore gaining positive revenue, improved cost synergy, and reduced technology costs.IS transactions can happen at a higher price if earnings and product synergies can be pinpointed and their profitability is clearly identified.
Active IS Market Segments
In the IS industry, mergers and acquisitions activity tends to occur most in the following segments:
- Business Intelligence
- Financial Markets Information
- Legal, Tax & Regulatory Information
- Credit & Risk Management Information
- Marketing Information
Business Intelligence IS
The Business Intelligence segment of IS—defined as information on industries, products and services that help companies identify market opportunities, respond to competition, and plan new products—is a highly active area for M&A. These companies use acquisitions to increase their existing coverage and expand into adjacent markets.
Financial Markets IS
In the segment of Financial Market Information, acquisitions frequently focus on adding content and capabilities to their distribution platforms to serve large portions of rapidly changing financial markets. New data is always in demand and new types of analyses are needed. Companies seek innovation, new customers, and stronger financial market data versus that of their competition.
Legal, Tax & Regulatory IS
The area of Legal, Tax & Regulatory Information is subject to ever-changing laws and regulations around the world. Also, IS companies face added regulations with the expansion of cross-border trade. To adapt to the need for product changes, these firms turn to acquisitions to expand content and capabilities.
Credit & Risk Management IS
In this particular IS segment, it is most common to see specialized firms being active in M&A transactions, with their primary strategy being to obtain more individual credit content. Also, as new entrants emerge in this space, the major credit ratings agencies see buying them as a way to strengthen their existing credit rating models.
Marketing IS companies provide market research, audience management and other general marketing services. Companies in this diverse area use acquisitions for market consolidation, increased synergies, and the expanded mix of tools and information.
The Importance of Expert Guidance
As with any industry, it is recommended that business owners within the IS space engage the expertise of reputable M&A advisors to execute a deal in a sector that is subject to fast growth and high margins. These deals involve high levels of complexity and require the perspectives and resources of a partner that is committed to serving the best interests of the seller.
Choosing to sell your company is a big step. At Benchmark International, we understand what a life-changing decision it is. Our M&A experts are here to walk you through the process and provide the utmost peace of mind every step of the way. Give us a call so that we can embark on this exciting journey together.
Americas: Sam Smoot at +1 (813) 898 2350 / Smoot@BenchmarkCorporate.com
Europe: Carl Settle at +44 (0)161 359 4400 / Settle@BenchmarkCorporate.com
Africa: Anthony McCardle at +2721 300 2055 / McCardle@BenchmarkCorporate.com
ABOUT BENCHMARK INTERNATIONAL
Benchmark International’s global offices provide business owners in the middle market and lower middle market with creative, value-maximizing solutions for growing and exiting their businesses. To date, Benchmark International has handled engagements in excess of $6B across various industries worldwide. With decades of global M&A experience, Benchmark International’s deal teams, working from 12 offices across the world, have assisted hundreds of owners with achieving their personal objectives and ensuring the continued growth of their businesses.