The Acuris Sale as an Indicator

In today’s short post we will look at the news recently that important players within the financial marketplace are jostling for position with regards to the sale of a company that specialises in providing particular information to the financial world. The emergence of NewsCorp and the so-called ‘Big Three’ credit rating agencies as potential purchasers of Acuris suggest that this is a potentially important sale. However, the question for this brief post is whether the sale acts as an indicator for a much larger, and much more important sentiment.

Acuris, formerly the Mergermarket Group, is a ‘media company’ that specialises in providing financial information to the marketplace. More specifically, it has been noted for its excellence in providing information on Mergers & Acquisitions (M&A) to its subscriber base. Although its current owners BC Partners only purchased the company in 2013 for £382 million including debt, it is now widely rumoured that the company is for sale. That proposed sale is drawing in some of the largest players in the sphere, with News Corp and the so-called ‘Big Three’ credit rating agencies supposedly circling the company which onlookers suggest could go for more than £1 billion. However, there have been a number of reasons put forward as to why there is so much interest in the company, with those reasons ranging from the reliable subscriber base that the company enjoys, to the company’s year-on-year growth. Yet, one element that may be the case is that the potential purchasers are of the strong belief that the post-Crisis financial landscape will settle more than it has. One of the reasons why this potential sale suggests that is a theory put forward by the popular press and a leading audit firm: a relaxed financial environment results in improved M&A markets.

Bonamie et al find that what they call ‘policy uncertainty’ does negatively affect M&A activity. Lee agrees but in respect of cross-border M&A activity, which is obviously a major factor in the M&A marketplace owing to the globalised nature of the market; the Financial Times reported at the end of last year that global M&A activity for 2018 had eclipsed a previous record set on the eve of the Financial Crisis. So, there is evidence to suggest that global M&A activity is increasing and that the trend may continue. How do we know the trend may continue? One clear indicator of that being the case is the feverish speculation surrounding the sale of Acuris and, particularly, who is interested in buying the company. News Corp, S&P, Moody’s, Fitch, and private equity firms like KKR do not invest on sentiment, and it is their business to foresee trends. The credit rating agencies in particular work tirelessly in building a vast network of information services to take advantage of future trends, a fact evidenced by Moody’s relatively recent purchase of Bureau Van Dijk. If we accept that these market-leading players foresee some increased level of stability within the marketplace, then the question becomes is the regulatory framework strong enough, post-Financial Crisis, to constrain such companies from taking advantage of their position that they are currently jostling for position for? Has the credit rating regulation been improved enough so that the inherent conflicts of interest that remain within their business model do not affect the M&A market negatively in relation to this potential sale? The answer remains to be seen, but given the deregulatory sentiment on offer in the U.S. and the potential for a regulatory race-to-the-bottom post-Brexit, we may already have the answer now.

Keywords – Acuris, Credit rating agencies, M&A, NewsCorp, Business