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What The LRW Investment Means For The Market Research Industry

Lieberman Research Worldwide announced the successful raise of significant growth capital from Tailwind Capital, a private equity firm. This marks the first time LRW has raised outside capital, and the latest in a series of significant PE-backed moves in our category.

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Today Lieberman Research Worldwide announced the successful raise of significant growth capital from Tailwind Capital, a private equity firm. This marks the first time LRW has raised outside capital, and the latest in a series of significant PE-backed moves in our category (previous notable examples include deals for Research Now, Macromill/MetrixLab, SSI, and Focus Vision).

Before we jump into my take, here is a snippet of the press release for details

Los Angeles – LRW (Lieberman Research Worldwide), a leading market research and data analytics company, announced it has raised significant growth capital from Tailwind Capital, a private equity firm focused on investing in growth-oriented middle market companies. This capital will be used to drive LRW’s innovation strategy and vision to be the leading integrated data analytics research and marketing strategy consulting firm. This capital infusion will help LRW more rapidly develop and expand its suite of innovations in the areas of Pragmatic Brain Science®, virtual reality, social media analytics and big data. The capital will also be used for targeted acquisitions to strengthen LRW’s global footprint and leading edge capabilities in the “new” market research industry. The current management team of Chairman and CEO Dave Sackman and President, Jeff Reynolds will continue in their current leadership roles and remain significant owners of the business. Terms of the transaction were not disclosed.

Dave Sackman, Chairman and CEO of LRW said, “The market research industry is at an inflection point, and we see tremendous opportunity. Our partnership with Tailwind will enable us to innovate even more rapidly than we have the past few years and to meet the changing needs of CMOs and their marketing organizations. The world of data and digital marketing is growing exponentially, and with growth capital, we can shape that future. We fully intend to be recognized years from now as one of the pioneers and true leaders in creating what people are now calling the ‘new MR’ and we’re calling Integrated Data Analytics Consulting.”

Adam Stulberger, Partner at Tailwind, said, “This transaction represents a tremendous opportunity for Tailwind to invest in a proven winner that provides high quality services to a dynamic industry in the midst of a transformation. LRW has a very experienced management team and is well-positioned for future growth and expansion. We look forward to supporting LRW as it pursues future organic initiatives and acquisitions.”

LRW is recognized as one of ten most innovative firms in its industry and is one of the top 25 largest marketing research firms in the world.  Since 1973, LRW has been providing its data-driven consulting services to management teams of top global brands on issues such as strategy, branding, communications, new product development, and customer experience.  LRW leverages its unique “so what?®” consulting model, sophisticated marketing science capabilities and recent innovations in Pragmatic Brain Science® to deliver real business impact for their clients across a wide range of industries, including entertainment, pharmaceutical, technology, consumer packaged goods, health care, retail, food service, financial and business services, automotive, and many more.

The LRW deal stands apart for one important reason: this is the first time in this latest wave of interest in MR that a primarily service-focused consultancy has raised capital to pivot to a combined technology and services growth strategy. LRW has certainly invested significantly in the last few years in technology (their VR and new BX offerings for example), but now they are poised to begin acquiring new technology capabilities that they can provide a service wrap around to, and perhaps even more importantly, leverage multiple data sources for a holistic data synthesis offering, which is an important distinction. The combination of globally leading consulting human capital, a developing contextual framework for data analytics, and a mix of proprietary technology and smart tech partnerships is a forward looking formula for success.

Will LRW pivot as a tech play? No, I don’t believe so, but they obviously are focusing on the intersection between consulting and technology (specifically around data that drive insights) and I think that is where the future of the industry lies.  Increasingly we are seeing the demand from clients on pure tech / self service offerings to augment with a service solution. Just as most consultancies can’t fully pivot to tech companies, pure tech companies can’t pivot to service organizations either: new hybrid models are necessary to meet the need.  This new SwaS  (Software with a Service) category is likely to be one of the major trends in the research space over the course of the next five years and is a smart play across the board.

I had the opportunity to chat with CEO Dave Sackman on the news of this deal and get his view on what it means for LRW and the industry as a whole. It’s a great discussion and one that everyone should pay attention to, since LRW is now poised to become not just one of the smartest companies in our space, but also likely one of the largest. Here is the interview:

 

 

One last take away from this deal: Private Equity money continues to be available in this space and many investors are looking for opportunities. If your business fundamentals are strong, you have a proven track record of success, and are making the necessary changes in your business to remain not just competitive but to actually lead with innovation that delivers real business impact then you can find deals. Despite all the myriad dynamics impacting our industry, it’s still a great time to be in the insights space  as LRW just proved yet again.

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