Ipsos and Synovate: two years on
Two years ago this month, Aegis confirmed that it was in exclusive talks with Ipsos about the sale of its market research business, Synovate. The deal eventually concluded in October 2011, with Ipsos buying Synovate for £525m.
Then came the hard part. While most acquisitions are a good idea in theory, they rarely achieve all that they are meant to in practice. The problem comes in the integration. Business academics are split on whether mergers, on balance, destroy more value than they create.
“We have much better geographic coverage around the world and we have all the best people from Synovate and Ipsos now. But getting all those benefits visible to clients is an ongoing process… so we’ll see how we go”
For Ipsos and Synovate, the integration process is now complete. “Last year was a year of consolidation,” says Ben Page, CEO of Ipsos Mori, the UK arm of the Ipsos group. But has that consolidation created value or destroyed it? Page, who describes himself as a historian, says it’s “too soon to tell”.
The signs are positive though. “We have much better geographic coverage around the world and we have all the best people from Synovate and Ipsos now,” says Page. “But getting all those benefits visible to clients is an ongoing process… so we’ll see how we go.”
2012 was a flat year for Ipsos. Revenues of €1.79bn were the same as the pro forma figures for Ipsos and Synovate the year before. Global CEO Didier Truchot admitted that 2012 was “not an easy year”. The company lost market share, either from exiting certain activities or lost client contracts. Major client relationships held firm, and in many cases actually grew. But, all said, Ipsos was over-optimistic in its growth expectations, said Truchot.
“If there is a lesson to be learned from this error in our forecasts, it is that a merger like that of Ipsos and Synovate takes time, even if its physical and formal execution is swift,” said Truchot. “Time to reassure clients, and time for researchers and other staff to feel comfortable enough to collaborate between themselves, and therefore fully available to seize the opportunities that any market – even a lacklustre market – offers to the most enterprising.”
The swiftness of the merger was deliberate, says Page. “What we tried to do was learn from other companies in the industry who had spent a long time integrating their businesses, leaving them in their separate entities and then moving them around with various amounts of grief and wailing and gnashing of teeth. So what we did was a very fast integration. We completed the deal on the 12 October and by the 1 January 2012 we were absolutely clear about where everyone would be sitting.”
For Paul Stamper, now Ipsos Mori’s head of qual, the speed of the integration was like nothing he’d seen before. He was watching the process from the Synovate side of the fence, but prior to joining Synovate he was a long-time TNS executive. While there, he had gone through three other major merger processes, including the sale of TNS to WPP’s Kantar Group.
“The more uncertainty there is, the more people worry about whether they are going to have a job next month – and in an organisation that functions because your people are client-facing, you want to have as little of that as possible”
The swiftness of the integration helped deal with a lot of the personal anxiety that tends to accompany acquisitions and mergers, says Stamper. “The more uncertainty there is, the more people worry about whether they are going to have a job next month – and in an organisation that functions because your people are client-facing, you want to have as little of that as possible.”
Of course, within Synovate there was “a certain amount of shock” that greeted the news that the company was being groomed for sale. “Immediately everybody started Googling their counterparts on the other side to see what their profile looked like. There was a lot of Linkedin curation going on.
“But from the announcement that something was due to happen and it becoming a reality, it happened extremely quickly. And – apart from the natural disruption that comes with something like this – from an employee point of view, I think it was handled pretty well. I didn’t get a sense of people being left in the dark, of them being dumped on, of having things done to them.”
Page, too, had gone through a merger process before, when Ipsos bought Mori for £88m in 2005. “It was a good rehearsal for us,” he says. “It made us aware of the need to have as much clarity as possible.
“If you’ve got two qual units or two FMCG units, or whatever, you don’t want these people festering and worrying about who is going to come out on top. You’ve got to have clarity about that, and you don’t want two senior people running two qual teams. They’ve got to come together at some point so why leave them carrying on with separate cultures? You’ve got to get them together.”
Page is adamant that a quick integration “was the right thing to do”, although in certain instances, he says, people found themselves doing roles that weren’t right for them in hindsight. “But the physical integration was only one part of the process,” he says. “You can move the chairs relatively easily, but it’s moving people’s minds and getting them to be a single team that takes time.”
Part and parcel of getting two companies to act as a single team is to align them around a common suite of products and solutions. Different companies have different approaches to solving client problems, but “you want to try and choose the best bits of the two,” says Page.
“[Former Synovate CEO] Adrian Chedore talked about not losing Synovate’s ‘golden nuggets’ and he was right. So we’ve got the golden nuggets like Censydium, but we’ve re-engineered a whole load of products and approaches using the best of both companies – and that takes a long time; six months in some cases.”
Censydiam is a good example of this process of product integration, Stamper says. “The core of Censydiam is a very powerful tool; the model is very effective and works well. But there were also really powerful pieces of Ipsos IP that were doing some of the same things, but doing it from a different point of view; starting at a different methodological perspective – a different statistical assumption, if you will. The challenge was to find ways of integrating the best thinking of both parts, so you are communicating a solution that has a coherence methodologically, but allows you to do all the things that the various components are designed to do.”
This product review process came at the right time, says Page. “We’re at a point of inflection now where the industry is faced with DIY at one end, plus the continued squeeze on marketing budgets and clients wanting better ROI for their spend. We’ve taken advantage of the fact that we needed to look at everything anyway, as part of our integration, to review some of these things in light of some of the changes in the industry, and the demands for faster, cheaper, shorter, quicker. We’ve tried to reflect all of that.”
The success of the merger, and all the integration work, will ultimately be measured months and years down the line. “Our results last year showed it was a tough year,” says Page. “But undoubtedly we spent a lot of time on internal issues, because you have to work things through. Even with the best will in the world you’re spending more time in meetings discussing internal things than you would like to, rather than being out there with clients.”
Getting back out there, then, is the priority for 2013 and years that follow, says Page. “Now everybody is completely settled, and we’ve gone through everything and chosen our solutions, it’s about being entirely focused on what clients need.”
But if dealing with a merger wasn’t hard enough, Ipsos and the research industry as a whole, has a lacklustre economy to contend with. “The challenge for researchers in this market is that we all have to be much hungrier,” says Page. “Nobody gets breakfast unless they take it off a competitor these days.”
Editor’s note: The interviews on which this article is based were conducted in April