Without getting unnecessarily weighed down in some very interesting Greek mythology, this title is meant to relate cause to effect. And the cause that comes to front of mind is highlighted in a recent Thomson Reuters survey (http://accelus.thomsonreuters.com/boardsurvey2011) on security and the boardroom. According to this the average board of directors creates almost 6000 pages of sensitive information a year, of which some 83% is exchanged over private email (e.g. Googlemail) at low or non-existent levels of security protection. Who needs phone hacking, one wonders, given the unprotected nature of much of our conversation by email! Having spent millions of dollars to ensure that no one penetrates the corporate IT bastion, we seem happy to allow lightly protected communications onto the public highway. So, if we are in the business of providing solutions for businesses looking at risk management in the round, this is the sort of factor we must bear in mind. And Thomson Reuters, with their BoardLink software within the Accelus Suite of compliance solutions are not going to let us forget.

And this in turn re-introduces us to the battle ground in business solutions software which is the liveliest part of the B2B scene at present. It is the only battle ground where Thomson Reuters, Wolters Kluwer, Bloomberg (more marginally for the moment) and Reed Elsevier do battle. And like Philoctetes and his poisoned arrows, the battle is now intense and those wounded in the last round are back on their feet and summoning fresh acquisition forces into the fray. Thus Thomson Reuters this week clear their decks by selling out of their position in trade risk management to Vista Equity Partners (http://wp.me/p17ayu-3e) in favour of concentrating their investments onto operational risk. Interestingly, the would-be purchasers here seem to have been mostly private equity players, happier with the medium term growth profile of the business Thomson Reuters were exiting and not necessarily needing, as the strategics would, a very immediate contribution today. This then was one of the few transactions of recent months that had a prerecession feel to it.

Which is not something that you could say about today’s news that Reed Elsevier are to buy Accuity (http://www.ft.com/cms/s/0/278a1d66-e80f-11e0-9fc7-00144feab49a.html#axzz1Z5nwd7oT). The deal, which sees Investcorp selling its position for £343 million (around 12 times Ebitda), creates a new global presence in banking solutions, where all the other players have strong interests and where Wolters Kluwer were wont to claim pre-eminence. Accuity Holdings is an interesting property, having been split out by its owner from Source Media, the old American Banker and Bondbuyer business. As one of those who worked on the then Thomson Corporation purchase of American Banker in the 1970s I feel the pull of history here. Later generations sold the business because it was regarded as a mainly print prospect. Now here are Reed buying the regenerative software arm of that once print business. No end then to our circularities!

Or our mysteries. The bit of Reed which bought Accuity was not Lexis Risk Management, where it had seemed that the resistance to Thomson Reuters bid to dominate operational risk management was centred. The actual buyer was RBI, now coming out from under the cloud of the later Crispin Davies years. The plan is to merge Accuity with Bankers Almanac, the venerable directory environment which transitioned into bank transfer coding and then into banking transactions and risk management. The guts to devise new things to sell to bankers at this juncture deserves an industry round of applause, and the risk is probably well – justified. However, Reed seem intent on building a new global business (the geographic fit here is a real value) founded on payment efficiency, risk reduction and regulatory compliance. Accuity is a data software business, with 14000 clients, a 95% renewal rate to its subscription base, and it claims all 25 top US banks as customers. Those banks, of course, are also clients of Thomson Reuters and Bloomberg. So battle is joined on a number of fronts. Reed’s shares went up 10p on the news, though one might have thought that they should have gone down an equal amount in the wake of losing BNA to Bloomberg, given that this acquisition lets Bloomberg into some interesting regulatory compliance areas, around government and also around areas like employment law BNA’s HR Advisor suite). Reading the analysts on Reed’s move, one senses the confusion: this is an immediately accretive buy that makes sense, but was performed by the part of the business that once seemed lost and now becomes the seed of growth.

So what is the strategy here now? The new grouping at RBI looks a bit like the old banking group (http://www.wolterskluwerfs.com/solutions/Market/Banking.html) at Wolters Kluwer (also run out of Chicago – Accuity was a neighbour of CCH in Skokie, Illinois). Are Reed pursuing a parallel train of thought to Thomson Reuters, but in narrow niches like banking (RBI) or insurance (Lexis Risk Management)? For Mark Kelsey and his colleagues at RBI, coming as it does immediately after the purchase of Ascend for their aviation division, this is a huge vote of confidence. For Lexis, coming on top of the loss of BNA, this seems like the opposite. Yet the strategic direction on all fronts is exactly the same: use data and software to create solutions that save the customer from the regulator, from the wrath of his customers and from himself. We are back to all those confidential documents on Googlemail.


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