The Global Media Weekly for executives and entrepreneurs

How far can GlobalData go?

The generic name is almost a disguise for a listed UK business information company with a valuation of £1.8bn which expects to increase its 25% EBITDA margin to 35% during the next five years.

GlobalData Plc is a subscriptions-based provider of “data, analytics, and insights”, to 4,000 worldwide clients in 16 industry sectors including pharma, technology, finance, and retail. It has some 3,400 employees. Last year, it had £178.2m revenue (13% up on 2018) and EBITDA of £44.6m (+38%), with net debt of £55m.

The company, which has made almost 20 acquisitions in the past five years, is 67% owned by Mike Danson, the under-stated Brit who quietly built Datamonitor in his north-west London apartment and financed it from thousands of pounds run up on multiple credit cards. His first profit came from a report on the UK frozen food industry.

In 2007, he sold Datamonitor to Informa for £513m in cash (7 x revenue). Some of the buyer’s major investors voted against the top-of-the-market deal. A high-priced deal was exacerbated by bad timing for Informa, which ended up cutting its 2008 dividend and carrying out a rights issue in the ensuing economic downturn. Two years later, Danson implied to the FT that Datamonitor’s value would have been halved by the banking crisis.

It made Danson look ultra-smart. The former management consultant pocketed £200m and started buying magazines and websites. Eight years later, he looked even smarter by buying back a quarter of his old company from Informa for just £25m. That was the start of GlobalData whose leading brands now include: Canadean, Kable, Verdict, Current Analysis, PharmSource, MEED, and MarketLine. Its customers are neatly spread across Europe, the Americas, and Asia.

Some 80% of revenues are annual subscriptions from member companies which have access to substantial volumes of news, analysis, original data and research, high-value consultancy, and networking events. GlobalData uses a single scaleable platform across all market sectors “to create differentiated and actionable insights”. It claims to offer 4,000 corporate customers “a single user-friendly interface, an end-to-end view of your entire industry value chain: from suppliers, manufacturers, channels to end-users (being consumers, patients, customers), all in one place and easily shared with colleagues.”

The company is building the kind of ‘platform dependency’ that has, for generations, grown customer loyalty for Bloomberg and Reuters in the financial markets.

Few know better than Danson how to build “premium data and analytics” and charge “real” subscription prices. Insiders admire his analytical skills and deal-making. Like his company, Danson is agile and quick. He doesn’t give interviews and doesn’t much care what people say about him.

Investors love GlobalData’s “build once, sell multiple times” business model which might explain how the share price doubled in 2019 and is now 33x EBITDA.

The investor confidence squashes any reservations about the stream of M&A between GlobalData and Danson’s private companies, including:

  • 2015: Acquisition of then healthcare data group GlobalData for £66.5m from Danson and Wayne Lloyd
  • 2015: Disposal of “non core B2B assets” to Research Views (owned by Danson and Lloyd) for £4.5m in cash (lent by GlobalData Plc)
  • 2018: Acquisition of Research Views for £90m (45 x EBITDA).

Then, there’s the fact that GlobalData Plc pays Danson more than £3m annually for its offices (some of which are sub-let back to his private companies) as well as for accounting, HR, IT, and facilities management.

The CEO-founder is a popular, knows-everyone boss and has a dry sense of humour. He works long hours in the office, is close to the detail of financials, datasets and audiences and jumps quickly from the micro to the macro. One of his executives said he was “inspiringly tough” to work for.

Danson can be generous and trusting. He gave a relatively junior staff member a blank cheque to bid tens of thousands on his behalf at a charity auction. He has donated more than £15m to provide bursaries for under-privileged students in his alma mater Oxford University and for other educational causes in Africa, Asia and the UK.

He has been a benevolent supporter also of needy UK magazines like Press Gazette and the politically-left New Statesman which he now seems to be building (privately) into a media-technology group. And he likes his Premier League football (Manchester United and Chelsea).

But Danson is careful with the company’s cash. The London offices are modest (but in a great central location), salaries are not high but senior remuneration is geared to generous longterm incentives. One manager noted in a leaving survey that she was irritated by the company’s then insistence on providing employees with coffee and tea – but not the milk.

For all the robust information and tech strategies, GlobalData has a hard-driving sales culture straight from the days when B2B publishers were all about hard copy reports marketed by telesales.

Danson’s opportunistic acquisitions cannot disguise the detailed four-year plans whose milestones punctuate twice-yearly presentations to all his teams. The assumption is that he will sell GlobalData at some point in order, perhaps, to expand his philanthropic work. But there’s no sign yet of anything other than accelerating growth and plans to acquire more of the niche specialist data and consulting companies which would strengthen GlobalData in individual markets and geographies. With available funding of some £145m, he may be keen to invest in the US and Asian markets that have given him the best growth in recent years.

He will be following the prospective merger of S&P Global and IHS Markit and the clear signs that many of the non-financial sectors may be divested. The Automotive, Life Sciences, and Retail divisions could be a good fit for GlobaData.

Perhaps Danson may still be interested in the £50m (and still under-loved) Centaur Media Plc which would add data and events in marketing, retail and law. Wilmington Plc would provide even more synergy in healthcare and global compliance but might cost more than £150m (10 x EBITDA). GlobalData’s strong share price (up 30% in the past 12 months) could ease the acquisition of such lower-rated listed companies.

But, more than almost anything else, Danson would love to acquire the Economist Intelligence Unit (EIU), the 75-year-old research and consulting arm of The Economist. The subsidiary, which this year reported £65m revenue and operating profit of £12.4m, is two-thirds political and economic research and one-third consulting. Research revenue is said to be derived mainly from subscriptions to the EIU’s Country Analysis, which provides economic, political and business analysis, and forecasts for over 200 countries in print and online.

The EIU accounts for 20% of The Economist Group revenue and 36% of operating profit but its performance has frequently been erratic and the modest growth rates include an almost continuous stream of bolt-on acquisitions. Danson may salivate at the prospect of getting hold of a company with an operating margin of under 20% whose revenue has grown only 6% since 2017. He is known to admire the EIU for its data resources, relationships and brand name – but regards it as woefully under-exploited.

The possibility of an acquisition or merger might not be such a wild idea, despite the EIU’s shared history with the eponymous weekly magazine since 1946. Just consider the way that The Economist’s investors have traditionally received dividends equivalent to almost 100% of the profits: the involvement of trusts in the ownership might make the 177-year-old magazine look a bit like a charity, but it’s nothing of the sort. The Economist is a real business which has had plenty of stop-start investments – in everything except the magazine itself.

The recent divestment of ancillary activities (especially in the US) may reinforce the impression that The Economist could be persuaded to de-merge or even sell the EIU.

That would represent a transformative deal for GlobalData. The EIU’s political activity would also encourage Mike Danson to bring New Statesman et al into GlobalData. Another little in-house deal.

The question is: Could The Economist’s investors resist a cash and/or shares offer for EIU of, say, £250m (20 x operating profit)? Danson’s projected 30%+ margins might make that “just” 12x the prospective profit. Tempting?

GlobalData Plc