Monday, 11 April 2005

Revealed: why Gartner took over META!!!

Many have been wondering actually WHY Gartner bought META, the less to be said is that Gartner was not quite clear in its communication as per previous posts.

Here are ARmadgeddon's analysis and revelations.

On the financial side of things, the acquisition will not do much for Gartner's balance sheet: according to the latest SEC filings, they have disbursed $162m for an entity registering $141m revenues (FY04) but with 2.1m losses.
So what does 1+1 makes? Those $141m were made of 89m for advisory services and 44m of consulting. A significant proportion of user and vendor clients were subscribing to both META and Gartner advisory services. Difficult to estimate the overlap, let's guess 1/3 and 2/3 for best case and worst case. The last evidence we have gathered suggests that between 3/4 and 1/2 of the MGC consultants are not going to join Gartner. This would mean that the incremental revenue that Gartner could gain would be between 40 and 81 millions. The ROI depends on the profit margin, but META has been loosing money since 2000 and were just back in the black in 2Q and 3Q04. Gartner's profit margin is around 2-3% , the acquisition price is between 2 and 4 years of the incremental revenue, meaning that this deal is going to take quite a while to pay back. Not sure what Silver Lake Partners thinks about this?

So are there other reasons for the Borg to assimilate the techno-utopians?
A week after this acquisition, some details are emerging that reveal their true motives: apparently, the Monitor Clipper Partners made a firm offer in December ; only to be outbidden by Gartner a couple of weeks later -rushing to make a competitive takeout. IDC is also said to have been in the race at some point. With that move, Gartner prevented META from going back private -thus better able to compete on price- and are now able to increase prices.... That should content their shareholders....

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