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OPINION1 November 2019

Consolidation is here

M&A New business Opinion UK

It’s hard to miss the raft of acquisitions going on in the market research industry. Jon Priest looks at the factors behind this deal-making environment

The next wave of consolidation in the UK insight and business intelligence market is long overdue”. I wrote this for Impact magazine in the summer of 2017.

There had been very few M&A deals announced in 2016 and 2017 – less than half a dozen in total. But click on Research Live these days and chances are at least one new sale announcement will be headline news.

To date, 16 UK or European research M&A deals of different shapes and sizes have been announced in 2019 with at least four others that I know of scheduled for year-end completion. The market seems to be finally consolidating. But why now and what has changed two years on?

Four things:

  1. Challenging times biting harder

Traditional like-for-like market research spend is in long term decline with the rise in digital data tech-led insight taking longer than forecast to replace the client spending gap. The latest Bellwether report from the IPA makes for further uncomfortable reading with the sharpest fall in total UK market research spend in Q3 for seven years.

With winds of a downturn forecast to continue into 2021 agency founder-owners have decided to act sooner rather than later. Safety through consolidation. Who can blame them?

  1. The re-emergence of PE buy and build

Small and mid-sized market research companies have become more open to joining the extended family that is, ‘the buy and build platform integration play’.

The rise and success of Horizon Capital-backed Strat7 and Next 15’s Savanta Group is proof that coming together to join forces in a market that is mature, declining overall but fragmented enough to represent value and growth opportunities when at scale, is a key factor for more deals.

Agencies have finally got the message that when they come together on a shared platform, they increase third party supply chain buying power, offer a broader bandwidth to clients and can price more competitively. For a best-in-class example of this, look no further than French PE-backed agency BVA acquiring BDRC 18 months ago. From the outside this looked a very good deal for all concerned; vendor, acquirer and clients.

  1. Buyer value

Private equity firms remain awash with cash from their current LP fund round with larger Plc’s also typically having a strong ready cash position on their balance sheets. Combine this with a greater appetite to sell and you will see more buyer activity and with deals being completed in shorter time frames. The market is now acquisitive due to value opportunities from greater buyer choice as more research companies embrace the advantages of an exit.

  1. What’s hot is getting hotter?

If you are an owner of a community’s insight business, or provide SaaS productised software tech, unique analytics or a smart specialist proposition that is genuinely scalable then expect some in-bound interest.

Conversely, if you are a long-established, mid-sized traditionalist lacking investment (or imagination) with negative growth then best not hold your breath.

The research and insight market is moving finally into the next phase of consolidation where greater economies of scale, increased productivity, access to growth capital and with heightened reinvestment all helping our industry evolve.

Table 1. Research & date M&A monitor 2019

Date

Vendor

Buyer

Oct 19

Happen (UK)

Accenture (US)

Oct 19

Decidedly (UK)

Populus (UK)

Oct 19

Pulsar (UK)

Access Intelligence (UK)

Oct 19

Creston US Holdings (US)

NextFifteen plc (UK)

Aug 19

ComRes (UK)

NextFifteen plc (UK)

Aug 19

Insitum (US)

Accenture (US)

July 19

Kantar (UK)

Bain Capital (US)

July 19

Join the Dots (UK)

InSites NV (BE)

May 19

Volunta (UK)

IFF Research (UK)

Apr 19

Research Bods and Bonamy Finch

Strat7 (UK)

Mar 19

Qriously (UK)

Bandwidth (UK)

Mar 19

?WhatIf! (UK)

Accenture (UK)

Feb 19

Bluedog (UK)

Lucid Group (UK)

Feb 19

Doxa (It)

BVA (F)

Feb 19

Via! (It)

Bilendi (F)

Jan 19

Vincent Consulting (UK)

The Student Room (UK)


Jon Priest is director of corporate advisory boutique, Capel Partners Limited

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