Investortools acquires strategic partner Merritt Research

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Investortools Inc. has acquired Merritt Research Services LLC, kicking into high gear a longtime partnership that has married the latter’s issuer financial data and credit research with Investortools’ software products with the two looking now to bolster the volume of analysis and speed of distribution.

Founded in 1983, Investortools provides software products that include its Creditscope, Perform, and Custom Index Manager used by portfolio managers and traders. Launched in 1986, Merritt provides detailed financial data and credit analysis tracking nearly 12,000 credits in at least 14 sectors.

The two formed a partnership more than two decades ago incorporating Merritt’s research into the Creditscope product marketed and distributed by Investortools.

“We see opportunity as the market is moving faster,” Jon Anderson, chief product officer at Investortools, said in an interview Monday when the acquisition was announced. “From our standpoint we’ve had a longtime, great relationship, and our clients love the Merritt research but what we are hearing is they want more and they want it faster and faster today is more important to the market than it used to be.”

The expansion relates not just to the breadth of credit data but also how it’s analyzed and modeled to aid in purchasing and trade decisions, Anderson said. The firm expects to begin rolling out new tools and new models to assist clients in “quickly making well-informed trading decisions.”

For Merritt, the acquisition lays the groundwork for an expansion of its database, a wider array of services, and enhancement of models. The firm already digs in beyond simple data reporting to associate bond issues with obligated parties and in addition to active research the Merritt staff that includes 30 employees verify, analyze and evaluate the data.

“We needed to put more emphasis on growing the company and adding offerings and broadening distribution” to maintain a leadership position in its database-driven credit research and stay relevant by positioning the firm for the future, said Ciccarone, who was the largest stakeholder in Merritt before the acquisition. Investortools was a minority holder.

“The unified company also simplifies business issues so it’s easier for us to expand the business and the services and distribute the information faster. It just became crystal clear to us that that Investortools was the best choice to allow us to achieve our goals for enhancement and expansion,” Ciccarone said.

“We certainly want to advance the company and in the world of technology if you don’t grow the company and become stagnant you won’t survive,” Ciccarone said. The firm is the oldest municipal credit database and Ciccarone said he’s proud of the work that he believes contributed to improved market liquidity through the early access to information it provided.

The need to stay relevant and keep up with the growing use of technology and data has come a long way since the launch of Merritt by Van Kampen where Ciccarone then worked was asked to spearhead. The firm first only covered the healthcare sector. It was a big endeavor to build the database so Van Kampen decided to offer the service to competitors.

Back then, Van Kampen was a unit of Xerox Corp. and many portfolio managers and traders didn’t have a personal computer so “we threw in a computer” if you bought a subscription for $11,000, Ciccarone said. He eventually took over the company as the lead owner in 2001.

“The world of technology today from where we started is night and day and it’s really accelerated in the last five to seven year in terms of the level of interest in capital to build technology products,” Ciccarone said.

Iowa-based Merritt will drop the LLC attached to its name to become a wholly owned subsidiary of Illinois-based Investortools which is led by Anderson and chief operating officer Mike Green. The firm’s two main offices are in suburban Chicago and Colorado Springs. Ciccarone, who is based in Chicago, will remain president of Merritt. Troy Gerleman serves as Merritt’s chief operating officer.

The personal relationship between Merritt and Investortools predates both firms through the camaraderie of mutual buyside research analysts — Ciccarone and Investortools’ Paul Daniels who worked at Nuveen. Daniels and his son Dan founded the firm that would go to become Investortools. The elder Daniels died last year.

Green and Anderson were elevated to their current leadership posts this year. The firm’s suite of software products through the Creditscope, Perform, and Custom Index Manager products offer fixed-income credit analysis, risk management, compliance, and a one-stop shop for benchmark comparisons. The firm offers products beyond the municipal finance space and counts more than 200 companies and financial institutions among its clients.

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