Gartner will acquire META Group in an all-cash transaction valued at $10.00 per share, or approximately $162 million. Both companies are based in Stamford, Conn., and provide information technology research and consulting. Meta Group , which revamped its executive ranks last month, had revenue of $104 million and a $48,000 loss in the first nine months of 2004. Gartner had revenue of $638 million and net income of $12 million in the same period. In 2003, Gartner generated $858 million in revenue from 76 locations around the world, while META Group generated $122 million in revenue from 52 locations.
Gene Hall, Gartner's chief executive officer, said the combination "will give gartner the increased depth in key sectors, geographies and markets, and an increased ability to seize revenue opportunities with the addition of Meta Group's well-trained, successful sales force." Meta, which has a different analysis style compared to Gartner always used to say that corporate customers believe Meta offers better customer service than Gartner, was generally perceived to offer more objective analysis than gartner by 2:1 had to finally offer itself up for sale. I certainly think that the consumer are genuinely losing out here by means of reduced choices -particularly in this case, as I have always felt that both these firms have disctinct styles, focus and approach towards applied research..
Sad to see Meta getting swallowed , but this portends some trends:
- Research & Consulting is becoming more competitive..(It was always the case..)
- But now with the tech industry in a different phase of growth ( we recently covered Carly Fiorina’s view on slowing tech industry growth - "On the fact that technology become a utility-like industry, with permanently slower growth" - Carly said that the tech industry is going to grow at two times growth [in U.S. gross domestic product]. It was a five-times-GDP-growth industry in the late 1990s, and that was unsustainable. Now we've entered a period where tech is fundamental. When something becomes fundamental it involves a more important and complex set of decisions, so growth slows. By the way, two times GDP is an OK growth industry. But it's not what it used to be.I think there are changes that are yet to occur". The software industry still has some consolidation to go. [So does] the communication-technology side" and we also recently covered the turmoil in the tech industry
- Almost an year and half back, Forrester bought over Giga and we are left with a few other small consulting research outfits apart from financial service research. Recently we saw many product companies making acquisitions, oracle, Symantec, Sterling commerce(Yantra acquisition), Lenova(IBM), EMC(Smarts) not to forget the Cingular (AT&t wirleless deal)May be its rule of three in action.
- Next expecting – we can be certain to expect acquisition announcement by software service companies..(watch for announcements by IBM, Infosys and Wipro etc..)
- Expect more consolidation amongst the consulting research organisations themselves - afterall, Moreover the nearest research competitor viz.Forrester is reporting a revenue of around 126 million USD last year -roughly less than one sixth the size of the new Gartner