PAC’s Berlecon purchase is a highly strategic move

As I’ll report on the IIAR blog today, PAC has bought Berlecon:

Today Pierre Audoin Consultants (PAC) bought Berlin-based analyst and consulting firm Berlecon Research. It’s a excellent choice for PAC, and a very natural partner for Berlecon because of the two well-established firms’ long period of cooperation and their similar continental cultures and the consulting-heavy business model which is essential to success in the German market.

Berlecon has long been a strong M&A target, something we which noted long ago; In 2005 I commented that both PAC and Berlecon would fit together nicely if Ovum wanted to expand. Despite the premature death in 2006 of the firm’s talented founder, Thorsten Wichmann, the firm has held on to a data-heavy approach (reflecting its distinct reliance on economic analysis).

Indeed, at times the firm is quite belligerent against its competitors’ data quality: I translated one of these broadsides, and it gives a good flavour of the firm’s pride. This evidence-based approach has allowed it to build strong relationships with public sector clients, especially regulators and those concerned with open source solutions. Its partnership with the Fraunhofer Institute gives it a capacity to evaluate emergent technology that’s rather different from larger analysts firms focussed on already-mature solutions.

Bringing Berlecon into the PAC family builds on already existing co-operation, and allows both firms to sell joint projects and larger deals more credibly. Most importantly, the two firms have worked together in SITSI, probably the world’s longest and widest joint project between analyst firms.

The various strengths of the deal are, at the same time, its weaknesses. As we’ve pointed out before, there’s a connection between the data-intensity and social media shyness of both PAC and Berlecon, which doesn’t even have a twitter handle. Both PAC and Berlecon sell heavily through personal relationships, and neither firm has interest in investing seriously in marketing and business development by global standards (even though, when measured against German peers, Berlecon does well). Being privately owned, they are focussing on building profitably (where they are strong).

Another result of this has been the low profile of both Berlecon and, until a few years ago, PAC in the English speaking world. Very little of Berlecon’s materials are available in English, even on the website of a flagship project like the ICT Research Board That makes it hard for AR professionals in the English-heavy tech industry to understand or communicate the very different value of the firm’s approach.