M&A Mania

This week Forrester Research Inc., a research and analysis firm, unveiled its intentions to acquire advisory firm Giga Information Group Inc. for $60 million in an all cash deal. The acquisition is an attempt to expand Forrester's emerging technology coverage and reach. "Our research is strategic and forward-thinking, while Giga is great at providing IT research on what's here today," says Brian Kardon, vice president of strategy and marketing at Forrester. The acquisition, Kardon maintains, will help organizations that are considering CRM "to think hard about what they have to do with CRM now. Should I buy Siebel [Systems Inc.], or move to a back-office solution? This is at the core of Giga. At the core of Forrester, we look at vendor relationships and technology evolution over the next three to five years, such as new ways to capture data and how your current CRM system can migrate to new technologies." Giga brings approximately 1,200 client relationships to Forrester, of which 900 are new client relationships. "It is a tribute to everyone at Giga that Forrester has decided to purchase our company. I believe these two companies will combine into a research powerhouse that will provide unparalleled levels of customer satisfaction," John Andrews, Giga's president and CEO, said in a statement. The move, Kardon says, puts Forrester in a "two-horse race" with analyst firm Gartner Inc. After Gartner, he adds, there was not a clear number-two research firm, as Forrester, Giga, MetaGroup Inc., and Interactive Data Corp. were all competing far below Gartner in market share. Why is Forrester interested in Giga now? Kardon says Forrester is sitting on a bundle of cash--a couple of hundred million dollars to be exact. And Forrester was simply waiting for the right time to buy. "Giga was not a profitable company until last year," Kardon says. "We were looking at Giga for a while, but wanted to wait for it to be profitable. It has been [profitable] for well over a year, and now we're buying the company at a very attractive price." Separately, Current Analysis Inc., a five-year-old tactical advisory firm, acquired ARS Inc., a nearly two-decade-old IT hardware, component, PC and peripherals, and consumer electronics advisory firm for an undisclosed sum. The deal will raise Current Analysis' top-line revenue from $15 million to $22 million. The combination of the daily intelligence collection methodologies of ARS and the change-driven analytical model of Current Analysis should enable customers to use competitive intelligence every day to stay informed, to make better decisions, and to gain a competitive edge. The acquisition adds 50 employees to the Current Analysis team, bringing the combined employee count to 150, half of which are research and analytics professionals. ARS also adds 75 client relationships to Current Analysis' existing base of 200 customers. Despite the down economy, financially both companies have been doing well, says Jeffrey Swartz, CEO of Current Analysis. "Both companies' performance over the past two years has put us in a great financial position to conduct this merger. The time is perfect, because over the next 18 to 24 months there will be a steady rebound in the market." Organizations considering CRM will benefit from this merger, Swartz says. "We want to integrate competitive intelligence into sales, marketing, and customer support processes, and show companies how to respond to a competitive threat, or how to sell to and retain customers."