Toronto-based financial services research firm Investor Economics Inc. has been acquired by U.S.-based Asset International Inc. Executives at both firms expect Investor Economics to expand its reach, both at home and internationally.
Under the agreement, Investor Economics will become part of Asset International’s Strategic Insight division, which supplies data and research to the investment and global asset-management sector through offices in New York, Boston, Stamford, Conn., London, Hong Kong and Melbourne, Australia.
Investor Economics president Earl Bederman, who founded the firm in 1992, will stay on with the company, along with the Investor Economics staff of 30, including Goshka Folda, Guy Armstrong and Carlos Cardone. Bederman has been named vice chairman of North America for Asset International, reflecting, Bederman says, “a desire by Asset International to encourage Investor Economics to widen its sphere of influence.”
Bederman, 63, says the agreement was not based on any need to sell Investor Economics and he does not have a fixed term for how long he will stay on. The deal, he adds, will give him time to plan what he wants to do next.
“[But] if Earl had told me he would not stay,” says Jim Casella, CEO of Asset International in New York, “it would be unlikely that Asset International would have moved forward. I don’t ask people to stay forever, but I do want at least a two-year commitment.”
Bederman says Investor Economics clients will benefit from the transaction through Asset International’s many other related businesses around the world, including media, communications and insurance firms.
“The companies we’re now affiliated with,” Bederman says, “have many benefits, in terms of tools and research, that will strengthen the offering that Investor Economics will have for its Canadian clients, as well as enhance and expand the productivity of our staff.”
Bederman adds that many Investor Economics clients are interested in learning about developments in Australia, the U.S. and Britain. because trends that begin in those markets often appear in Canada.
“So,” Bederman says, “it’s a way of transporting knowledge to our clients and prospective clients, [a way] that does not currently reside within our organization.”
On the flip side, the agreement will allow other Asset International companies, particularly Strategic Insight, to tap into the knowledge and expertise that Investor Economics can provide regarding markets in Canada.
Casella says Asset International will share a number of financial and technological advantages with Investor Economics as a result of the acquisition.
“What we bring,” Casella says, “is capital and the ability to integrate web-based platforms and tools that will allow more searchability of the products and data from other parts of the world.”
One of Asset International’s major benefits is a workflow tool called Simfund 7.0, which already is used by such Strategic Initiative clients as Goldman Sachs Group Inc.’s asset-management team.
Bederman and Strategic Insight are not strangers. Bederman says he has shared ideas and research for many years with Avi Nachmany, director of research and executive vice president of Strategic Insight.
This past year, Strategic Insight and Investor Economics were jointly commissioned by the Investment Funds Institute of Canada (IFIC) to produce a study on the cost of mutual fund ownership. That project had provided the opportunity for the two to work together closely.
“It really fits very well with our long-term strategy,” Casella says of the acquisition, “as we continue to build out Asset International.”
Asset International first broached the idea of acquiring Investor Economics a couple of years ago, Casella says, but Bederman wasn’t ready for a new partner at that time. It wasn’t until the firms undertook the IFIC project on mutual fund ownership that talks started up again.
Says Casella: “There was some serendipity to it, if you will.”
Investor Economics is Asset International’s seventh acquisition since January 2007. Casella says it will be run, like the others, at arm’s length.
“When I set up Asset International,” says Casella, “the whole idea was that it would be entrepreneurial, try to make decisions as close to the client as possible and really empower the people who should be making those decisions, not those of us who are not near the markets.”
Asset International now has 250 employees, including the Investor Economics acquisition. Revenue this year is expected to be US$55 million-US$70 million. The majority shareholder is Texas-based Austin Ventures.
While Bederman did not reveal revenue figures for Investor Economics, Casella says Asset International buys only companies with “very good cash flows.”
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