March 17, 2015

Verisk Analytics Acquires Energy-Focused Data Intelligence Firm Wood Mackenzie

Last week, Verisk Analytics announced the acquisition of Edinburgh-based Wood Mackenzie, a global leader in data analytics and commercial intelligence for the energy, chemicals, metals and mining verticals. The acquisition establishes Verisk as a trusted data analytics provider at the center of the global energy market, similar to its position in the property/casualty insurance industry. Additionally, the deal allows Verisk to expand globally (specifically in Europe) which has been a key growth initiative.

The purchase price for the deal was approximately $2.8 billion, representing a multiple north of 8x revenue and 17x EBITDA. Not a bad return for private equity firm Hellman & Friedman, who acquired a majority stake in the business (from Charterhouse Capital) in 2012 for an enterprise valuation of approximately $1 billion. The valuation which represents a significant premium to the data/analytics industry average of approximately 4-5x revenue is a direct result of Wood Mackenzie’s deep vertical expertise, extensive proprietary data assets, highly recurring revenue model, consistently strong growth and leading profit margins.

Another similar, albeit substantially smaller deal, announced late last year was Verisk competitor IHS’s acquisition of PacWest Consulting Partners, a Houston-based company that provides information, market intelligence and strategic analysis to the upstream unconventional oil and gas industry. Additionally, Platts (subsidiary of McGraw Hill), Argus, EnerNOC and others have been active making small tuck-in acquisitions across the energy data intelligence ecosystem. Despite continued volatility across the oil and gas market, we expect M&A activity particularly across the data/analytics/software spectrum to continue as energy companies continue to view technology as the new frontier for competitive advantage.