Two of the biggest names in the international sourcing advisory market, Information Services Group (ISG) and Alsbridge, have joined forces in a move that has sent shockwaves around the sourcing world, with the former acquiring the latter for a total of $74 million, it was announced last week. The "new" ISG will continue to be headquartered in Stamford, Connecticut, and will now employ over 1,300 professionals working in over 20 countries around the world, serving over 700 clients (including 75 of the Global 100).
In a statement to the press when the acquisition was announced, ISG's CEO and Chairman Michael P. Connors called the move "an exciting and historic moment for our firm and all of our stakeholders." He added: "With this compelling combination, we are creating a 'new' ISG - one with a stronger market position and a broader, more valuable portfolio of automation and digital services, market intelligence and advisory capabilities to guide our clients on their digital transformation journeys. This is truly a transformative move that takes us to the next level of service, performance and growth."
Meanwhile, Alsbridge's erstwhile CEO Chip Wagner - who will now occupy the new role of president and partner of ISG Business and Emerging Services - paid tribute to the company acquiring his 13-year-old firm: "We have long admired the strong team at ISG...The ISG and Alsbridge businesses, cultures and values all mesh extremely well. It really is a case of the whole being greater than the sum of the parts." Wagner went on to echo Connors' thoughts on the future potential of the new advisory behemoth: "By combining and integrating our service offerings, we are creating a new industry leader that redefines the research, sourcing and digital technology advisory market."
The acquisition significantly bolsters ISG's position as the head of the global outsourcing advisory industry: the new organisation now advises on contracts worth almost $18 billion. However, ISG is very keen on being seen as much more than "merely" a sourcing advisory firm. In an announcement following the deal's completion, the firm described its enhanced portfolio as offering "digital transformation services, including automation, cloud and data analytics; sourcing advisory; managed governance and risk services; network carrier services; technology strategy and operations design; change management; market intelligence and emerging technology research and analysis."
As well as incorporating Alsbridge's various service lines - with particular emphasis being placed on its Network Carrier Services (a market hitherto untapped by ISG) and Robotic Process Automation lines - and creating substantial cross-selling opportunities, ISG expects the acquisition to "deliver significant financial benefits to the firm and create long-term value for ISG shareholders...The combination produces substantial synergies through combined efficiency and growth. ISG expects to generate $7 million of annual cost savings within 18 months."
Less immediately quantifiable, but perhaps most significantly of all, the acquisition also brings a wealth of talent under the ISG umbrella, with the great majority of senior Alsbridge executives - including some of the best-known figures in the space on both sides of the Atlantic - moving into leadership roles in the "new" ISG" along with Wagner's aforementioned move, for example, Alsbridge President Dieter Thompson will be leading ISG's network services unit. More information detailing these new roles is expected shortly.
Reaction to the announcement from across the world began to be heard almost immediately. While a degree of consolidation in the advisory space has been expected by many observers for quite some time, that such major players would come together in this way appears to have taken plenty of people by surprise; the acquisition is the most momentous move in the advisory space for years, if not ever - certainly since KPMG's takeover of EquaTerra in 2011.
Dawn Tiura, CEO and President of Sourcing Industry Group (SIG) - which has partnered with Alsbridge to produce next February's Challenge the Future (CtF) Awards - views this as a hugely promising development: "We at SIG were excited to hear the news of the acquisition. This has created a new powerhouse of a company and they will be giving the Big 4 a run for their money."
How the Big 4 - and, indeed, the other sourcing advisory firms in the market - react to the news in practice remains to be seen; many industry experts now expect further M&A activity as competitors move to bolster their defenses against such a powerful and multi-faceted player, and indeed it could well be that this acts as a trigger for the long-anticipated wave of consolidation mentioned above. However, it's hard to think of a possible combination which could make quite the same splash as the ISG/Alsbridge union. The sheer size and bidding power, and exceptional capability set, of the new organization will undoubtedly be contributing to a fair bit of head-scratching - and possibly a few sleepless nights - within an advisory community already facing a number of significant challenges. The merry Christmas soon to be enjoyed in the households of Alsbridge and ISG shareholders may not be felt quite so merrily in other corners of the space.
Earlier this week Michael P. Connors and Chip Wagner got together to speak exclusively with Outsource - with which both ISG and Alsbridge have had long working relationships, including having columns on the Outsource site - to give readers their thoughts on what the deal means for ISG and for the broader sourcing and outsourcing space. As Connors says in that interview, "words are important. We feel words matter" (as an editor, I couldn't agree more, of course...) and certainly both men are conscious of the importance of communication, of "bringing to life what this really means", as Wagner puts it. To find out more about the "deal of the century" through the words of the two men at the top, read the full, exclusive at: http://outsourcemag.com/qa-michael-p-connors-and-chip-wagner-isg/