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The Burton Group, of Midvale, has been acquired by Gartner Inc., the largest player in the computer systems and software research market -- a move that will allow the Utah company to rapidly expand into international markets, its CEO said.
The $56 million cash sale closed at the end of last month, the two companies announced Thursday.
Gartner, of Stamford, Conn., is the leading company for sales of research on information technology to companies looking for technical advice on how to build, expand or operate computer systems and networks. It had about 45 percent of the market share before the acquisition.
The Burton Group has 41 research analysts, 40 sales and customer-service employees and estimated 2009 revenue of $30 million. Gartner has 4,000 employees, including 1,200 research analysts and consultants in 80 countries. In 2008, it had $1.2 billion in revenue.
Burton Group Chief Executive Jamie Lewis said the deal will allow the Burton Group to grow rapidly, taking advantage of Gartner's global reach.
"Through this acquisition we can instantly gain access to a distribution channel, and we can realistically double or triple the size of our business over the next couple of years," said Lewis.
Gartner Chief Financial Officer Chris Lafond said the company planned to keep almost all employees of the Burton Group and keep its Utah office.
"We intend to keep the Burton products," said Lafond. "The reason we bought them, and thought it was such a great organization, is they have such great content and such great brand recognition."
Lafond said that although the two companies were in the same industry, there was little overlap. Gartner provides strategic guidance and research on systems and products to high-level company officials such as chief information officers. The Burton Group sells much more technical and practical advice to people with hands-on responsibilities for information technology.
"It's the type of research serving the buyer that we were not serving," Lafond said. "It absolutely brings a top to bottom approach to serving an entire IT organization."
Gartner is a publicly traded company. The Burton Group deal and Gartner's acquisition last month of another firm, AMR Research, received the blessing of Piper Jaffray & Co. analyst George Tong, who upgraded his rating of Gartner from neutral to overweight.
Tong revised Gartner's 12-month share target price to $27 in 2010, saying that suggests there's room for a 40 percent increase. Gartner shares finished trading Thursday up $1.58, or 8.3 percent, to $20.44.
"We expect Burton will achieve scale and margin expansion in the long run within Gartner through enhanced distribution and cost savings," Tong said in a report.
The Burton Group was founded in 1990 by Lewis and Craig Burton, both of whom had been at Novell. Lewis bought Burton out and through acquisitions took on several other partners. At the time of the sale, the company was owned principally by Lewis, David Passmore, Gary Rowe, Dan Blum and Ted Myer, as well as employees who had stock options.
With the sale, those options were fully vested and employees received part of the sales proceeds, Lewis said.
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