More analyst firm consolidation

October 22, 2006 at 10:04 pm Leave a comment

On Friday, it was announced that Datamonitor is to buy Ovum in a deal that values the company at $80m – an almost 50% premium over Ovum’s pre-announcement market cap, according to Citywire. The justification for the premium, says Datamonitor’s CEO Mike Danson, is that 70% of its revenues comes from subscription-based products (ie research and reports) and are therefore recurring. Danson dismissed Ovum’s marketing of itself as a people-based consultancy (a lower margin model) as “flannel.”

Europe’s largest technology analyst firm, Ovum is probably best known in the US for its acquisition of telecom-focused house RHK and, in July this year, of Summit Strategies. Datamonitor doesn’t just focus on the tech industry and is Europe’s largest analyst firm across the board. It, too, has had its fair share of acquisitions in recent years, including news service Computerwire and analyst firm Butler Group. As with these acquisitions, its seems that Datamonitor plans to maintain Ovum as a separate brand and entity.

Of course, as Dean Bubley of Disruptive Analysis points out, Datamonitor is still nowhere near the $800m size of industry big dog Gartner. Should it decide to go for global domination, however, there is no shortage of mid-size firms it could target – Yankee, Strategy Analytics, Pyramid, IDATE and Current Analysis are his suggestions.

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