Morningstar, Inc. (MORN), a leading provider of independent investment research, today announced that it has entered into a definitive agreement to acquire PitchBook Data, Inc.
PitchBook, founded in 2007, delivers data, research, and technology covering the breadth of the private capital markets, including venture capital, private equity, and mergers and acquisitions (M&A). PitchBook will maintain its brand and identity and will continue to be led by founder and chief executive officer John Gabbert.
Morningstar was an early investor in PitchBook and currently owns approximately 20 percent of the company. The company expects to pay approximately $180 million (subject to working capital adjustments) for the remaining ownership interest in a transaction that values PitchBook at $225.0 million.
Morningstar President Kunal Kapoor, who has served on the board of directors for PitchBook since 2012 and will become chief executive officer of Morningstar effective Jan. 1, 2017, said, "Both Morningstar and PitchBook share the goal of bringing transparency to the investment landscape, and PitchBook is in a great position to continue its strong growth trajectory as private markets and private companies are areas of rapidly growing investor interest. Data has always been Morningstar's sweet spot, and we look forward to working with PitchBook to help investors and advisors better understand and navigate this evolving area of the market. Over time, we plan to add some of Morningstar's proprietary research capabilities to this dataset, and we also see meaningful opportunities to expand the business globally."
"I reached out to Morningstar as a potential investor seven years ago because I admired the company's entrepreneurial spirit and innovative products," Gabbert said. "Joining forces with Morningstar will help us enter into our next stage of growth, including developing the next-generation version of our award-winning data and software platform, investing in our world-class sales and customer support functions, and expanding our business in Europe and Asia. As investors increasingly broaden their horizons beyond traditional public markets and investments, the multi-asset capabilities Morningstar is building will become even more valuable."
Data on private capital markets is difficult to find and often in non-standard formats, and PitchBook has built a leading market position with its comprehensive private market datasets and robust research process. PitchBook's client count has more than tripled over the past three years (to more than 1,800), and sales bookings have grown by a compound annual growth rate of more than 70 percent for the five years ended Dec. 31, 2015. The company's PitchBook Platform and best-in-class user interface make it easy for clients to access data, discover new connections, and conduct research on potential investment opportunities. PitchBook covers the full lifecycle of venture capital, private equity and M&A, including the limited partners, investment funds, and service providers involved. With the acquisition of PitchBook, Morningstar will be able to apply its core data and software capabilities to a new client segment: private and institutional investors.
Based in Seattle, PitchBook had $31.1 million in revenue for the trailing 12 months ended June 30, 2016. The company has more than 300 employees located in Seattle, New York, and London. Morningstar originally invested $1.2 million in PitchBook as a Series A Preferred investor in September 2009 and another $10.0 million as a Series B Preferred investor in January 2016. Subject to customary closing conditions, the two companies expect the transaction to close in the fourth quarter of 2016.