AI disruption in Data & Analytics - Asymmetrix Newsletter #85
We look at how the rise of AI may have influenced two recent deals: the sale of PriceMetrix to S&P's CRISIL and Verve Group's acquisition of Captify
In this week’s newsletter we share our thoughts on two recent Data & Analytics transactions, which reflect differing impacts of AI on M&A transactions in the sector, selected from the insights published on our subscription platform:
CRISIL, majority-owned by S&P, announced the acquisition of McKinsey’s PriceMetrix, a provider of benchmarking for wealth managers and financial advisors for $38m;
Ad tech platform Verve Group announced the acquisition of Captify, a provider of search intelligence for EUR25.6m.
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S&P’s CRISIL acquires PriceMetrix for $38m
CRISIL, majority-owned by S&P, announced the acquisition of McKinsey’s PriceMetrix, a provider of benchmarking for wealth managers and financial advisors for $38m.
PriceMetrix, which will be integrated into CRISIL Coalition Greenwich (CCG), provides benchmarks on business performance, commission pricing, product pricing, and advisor compensation, among other key operational metrics.
The sale of PriceMetrix is noteworthy on several fronts:
1. The Business of Wealth Management: The wealth management industry has grown significantly in recent years due to rising wealth, transfer of wealth from the baby boomer generation, positioning as key gatekeepers for private market fund investment, and immense interest from private equity funds looking to consolidate/roll-up wealth management firms.
As more resources have been devoted to managing and growing wealth management firms, more data and software tools focused on the business of wealth management have come to market.
These tools are decidedly not focused on helping advisors advise better – financial data and investment research are already widely available – but on making their firms win more business and operate efficiently. PriceMetrix’s benchmarking solutions do just that.
2. The Delicate Dance with Data Businesses: As discussed in our piece on the Kroll StepStone Private Credit Benchmark, there is coherent business logic in professional services firms offering data products to clients alongside services offerings – and often a low-hanging opportunity to productize information sitting within their businesses.
On the other hand, if/when these businesses no longer provide strategic value, become too much of a drain on cash flow or are just not run properly – or all three – they may be divested.
Our assumption is that McKinsey management viewed PriceMetrix as a non-core asset that ticks some, or all, of those boxes.
3. AI Cloud Hangs Low Over Professional Services Firms: With AI disruption looming, consulting firms are likely looking to tighten their belts, shore up their balance sheets and focus on strengthening their core offerings. In that context, shedding data or software businesses to boost cash positions – $38m is a nice chunk of change, even for the behemoth that is McKinsey & Co. – and rationalizing operations seems reasonable.
We saw similar deals in 2024 when Corlytics acquired Deloitte UK’s RegTech platform, and Inflexion and Endicott Capital carved out aosphere from A&O Shearman.
Asymmetrix expects to see more carveouts from Professional Services in the near term, and particularly from consulting firms. Might CRISIL Coalition Greenwich (CCG) become an acquisition target in turn?
AI disruption of search market impacts on Capify valuation in acquisition by Verve Group
Ad tech platform Verve Group has announced the acquisition of Captify, a provider of search intelligence. Captify collects billions of data points on internet users’ search behavior, providing brands with insight into consumer interests and intentions. Captify’s search data is used for precise ad targeting and campaign measurement, leveraging the consumer intent signals reflected in the search data.
Captify will contribute EUR41m of revenue, with EUR5m of expected EBITDA including post-deal synergies. The total purchase price of EUR25.6m reflects an EV/EBITDA multiple of 7x before synergies and 5x after synergies. The transaction is structured such that EUR16.2m is paid at closing and EUR9.4m is deferred until 18 months after closing.
The deal’s terms are certainly interesting and atypical; both Data & Analytics and AdTech businesses often trade between 10-20x EV/EBITDA, far higher than the multiple Captify traded for. The earn-out embedded in the structure suggests that the buyers are hedging their bets on the business and perhaps making payment of the remaining 40% of the purchase price contingent on realizing post-deal synergies 18 months after closing.
The same execution risk that prompted the buyers to negotiate a deferred cash payment for a large portion of the purchase price may also be what is driving the relatively depressed EBITDA multiple.
That said, the depressed valuation multiple may be a result of macro trends at play, such as the impact of post-cookie depreciation on programmatic advertising.
The business of search is feeling the disruption, with AI platforms like ChatGPT, Perplexity and Claude (none of which wrote this article) fundamentally changing how consumers and businesses search, slowly disintermediating Google and other search engines (to some degree). As a result of more advertising dollars shifting away from search, the fear is that traditional search intelligence may be meaningfully devalued, proprietary data or robust data capture notwithstanding.
Which leads us to the sub-sector gaining steam: GEO Intelligence. GEO, or Generative Engine Optimization, is the equivalent of SEO, but for AI-driven search.
Like SEO, GEO focuses on optimizing websites for AI engines to ensure maximum discoverability. Providers in this space, such as Brandlight, Geostar and Profound measure how often and where a brand is cited by AI assistants across different platforms. They also assess tone used by AI chats when discussing brands to analyze brand health and messaging and recommend adjustment in website content to improve citations and rankings.
The dust has far from settled - we are still in the early days of integrating AI engines into our personal and professional lives. But as it becomes clearer that AI engines are here to stay, Asymmetrix will continue to closely track developments in this space.
If you would like to have access to Asymmetrix’s underlying data and insights via our subscription product, contact us directly at asymmetrix@asymmetrixintelligence.com